Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

DUNDEE CORPORATION BILL

Read the Third time and passed.

MONMOUTHSHIRE COUNTY COUNCIL BILL [Lords] (By Order)

Consideration, as amended, deferred till Thursday next.

GLOUCESTERSHIRE COUNTY COUNCIL BILL [Lords] (By Order)

SWANSEA CORPORATION (FAIRWOOD COMMON) BILL [Lords] (By Order)

Second Reading deferred till Tuesday, 24th January.

Oral Answers to Questions — HOME DEPARTMENT

West Indian Immigrants

Mr. Osborne: asked the Secretary of State for the Home Department if he is aware that many West Indian immigrants would like to return home but cannot do so because they cannot afford the return fare; and since British immigrants are not allowed into the Colonies without sufficient money to pay their return fare, whether he will take powers to ensure that no future colonial immigrants into the United Kingdom will be allowed unless they deposit sufficient money to enable them to return home.

The Secretary of State for the Home Department and Minister for Welsh Affairs (Major Gwilym Lloyd-George): I have no information to support the suggestion in the first part of the Question. As regards the second part, I can add nothing to the answer which I gave to my hon. Friend on 27th October.

Mr. Osborne: How many, if any, Jamaicans are in receipt of National Assistance and, therefore, are a burden on the British taxpayer? If there are men who wish to return, can my right hon. and gallant Friend provide loans to enable them so to do?

Major Lloyd-George: I could not without notice give the figure for which my hon. Friend asks. My recollection, however, is that their unemployment compares very favourably with our own—as a matter of fact it is about the same. I could not, without notice, answer my hon. Friend's question about whether we can help them with loans. However, very few inquiries have been received at the Colonial Office from people wishing to go back.

Mr. Younger: Since the Home Secretary indicated that he has some information about the relative unemployment rates, does that mean that separate records are kept for Jamaicans, apart from the records generally of British subjects? If so, is not that an innovation?

Major Lloyd-George: I do not think that is so. I am subject to correction on this, and I will let the right hon. Gentleman know if I am wrong. Local inquiries were made, and on the whole that was the position which was found; but no separate figures are kept.

Doctrine of Constructive Malice (Report)

Mr. Younger: asked the Secretary of State for the Home Department when the Government propose to implement the unanimous recommendation of the Royal Commission on Capital Punishment that the doctrine of constructive malice in English law should be abolished.

Major Lloyd-George: The Royal Commission, although recommending that the doctrine of constructive malice in English law should be abolished, said "the practical effect of the doctrine of constructive malice at the present day is very limited and we cannot think that its abolition would lead to any striking change in the practice of the courts." This recommendation will, however, be considered when some prospect of legislation on the subject can be seen.

Mr. Younger: Cannot the Home Secretary tell us a little more about his intentions in these matters? Does he realise


that this is one more in the long list of negative answers which he has been returning to hon. Members on both sides of the House on numerous recommendations, very often unanimous, both by this Royal Commission and the Royal Commission on Betting, Lotteries and Gaming? Is he aware that the comments in the newspapers on his unconstructive attitude to the work of his Department is now becoming more widespread? Is he content to allow that to continue?

Major Lloyd-George: Frankly, I am not worried by what the newspapers say, and I do not accept what the right hon. Gentleman has said about unanimous recommendations. There was division about this recommendation. Some people, including some legal witnesses, thought, as this particular doctrine for all practical purposes was dead, that we might as well treat it as dead; others said that in that case we might as well abolish it; but there was no unanimity.

Off-licence Establishments, Carlisle

Dr. D. Johnson: asked the Secretary of State for the Home Department if he will state the number of off-licence establishments owned by the State management scheme in the City of Carlisle.

Major Lloyd-George: There are at present four off-sales shops in Carlisle under State management: a fifth will be opened as soon as practicable. In addition, off-sales facilities separate from the bars are provided in eighteen State managed public houses in the city.

Dr. Johnson: Is my right hon. and gallant Friend aware that in the coming season of the year there is customarily a long queue outside the single private off-licence in Carlisle, while his own off-licence generally remains in a state of under-employment? Will he not agree that this indicates a demand for more facilities for private enterprise services—?

Mr. Speaker: Perhaps the hon. Member has not yet learned that it is contrary to the practice of the House to read a supplementary question.

Motorist (Conviction)

Mr. Dudley Williams: asked the Secretary of State for the Home Department if he will recommend the grant of a free pardon to Mr. A. E. G. Anderson

of Exeter, who has been disqualified from driving for 12 months, in view of details of which case have been sent to him.

Major Lloyd-George: No, Sir. As my hon. Friend is aware from our correspondence about this case, I have considered the circumstances very carefully but I have found no grounds on which I should be justified in recommending the grant of a free pardon.

Mr. Williams: Does my right hon. and gallant Friend realise that this man was disqualified for 12 months because it was held that in fact the vehicle concerned was not insured, whereas an official of the insurance company said that it would have been held covered in the circumstances? In view of that, does not my right hon. and gallant Friend agree that Mr. Anderson has been most harshly treated and should be pardoned?

Major Lloyd-George: The grounds on which my hon. Friend relies in making this application for a free pardon were before the court; nevertheless, the court convicted. It was open to Mr. Anderson to appeal. He did not avail himself of the opportunity. It is, of course, open to him to apply after six months to see if the disqualification can be removed.

Mr. Williams: In view of my right hon. and gallant Friend's reply, I give notice that I shall raise this matter on the Adjournment.

Lord Mayor's Show

Lieut.-Colonel Lipton: asked the Secretary of State for the Home Department whether, in order to reduce traffic congestion, he will not reconsider previous refusals to hold the Lord Mayor's Show on a Saturday.

Major Lloyd-George: No, Sir. This proposal was carefully examined but rejected as recently as 1952. The route and procession were shortened in that year, and I would like to see further experience of the new arrangements before another change is considered.

Lieut.-Colonel Lipton: Is the Home Secretary aware that this annual nuisance dams London traffic over a very wide area and is damned by everyone who has business to do in London on that day? Has not the situation deteriorated even more since 1952, and why is the Home Secretary being so obstinate about it?

Major Lloyd-George: I am not being obstinate. First, it is not within my power to alter the date of the Lord Mayor's Show, because it is a statutory obligation that the ceremony at the Law Courts shall take place on 9th November unless it be a Sunday. As to its being a nuisance, there are a large number of people in the City of London who like it very much.

Motor Vehicles (Exhaust Smoke)

Mr. Russell: asked the Secretary of State for the Home Department how many warnings or summonses have been issued by the Metropolitan Police in the past year to owners of diesel-engined vehicles which emit smoke from their exhausts.

Major Lloyd-George: In the twelve months ended 30th September last five summonses and one hundred and fifteen written cautions were issued in respect of the emission of exhaust smoke from motor vehicles. No separate record is kept of the type of engine concerned or of the numbers of oral warnings.

Mr. Russell: Can my right hon. and gallant Friend say what response there has been to the warnings or to the summonses? Has he no impression, apart from actual figures, about whether diesel-engined vehicles are the main offenders in this respect, and whether the owners of them are helping in any way to reduce the smoke?

Major Lloyd-George: I could not answer that question now, but from my own observation I should have thought that probably the diesel engine may emit a lot of smoke. I am in consultation with my right hon. Friend the Minister of Transport on this question, and I hope to be able to do something about it.

Polish Citizens (Naturalisation)

Mr. Langford-Holt: asked the Secretary of State for the Home Department (1) how many former Polish citizens who are ex-members of the Polish forces under General Anders, but who were previously conscripted during the occupation of Poland into the German armed forces, have been granted certificates of naturalisation;
(2) how many former members of the German armed forces have been granted certificates of naturalisation.

Major Lloyd-George: I regret that this information is not available.

Mr. Langford-Holt: Does that mean that no statistics are kept of the number of Poles who are naturalised, the number of ex-members of the Polish forces who are naturalised, or the number of Poles who were former members of the Polish forces who were temporarily conscripted into the German Army and are now naturalised British subjects?

Major Lloyd-George: Figures showing the total number from Poland, Germany and Italy are available, and I can give them. In round figures, since the war there have been 16,000 of Polish nationality, 16,300 German and 2,400 Italian. It would be impossible to find out, as my hon. Friend asks, the number who were previously conscripted into the German armed forces, because it would mean going through about 35,000 files, and even then one would not know whether a man was conscripted or whether he volunteered.

Heroin

Mr. Langford-Holt: asked the Secretary of State for the Home Department how many known addicts to the drug heroin there are, or are believed to be, in the United Kingdom.

Major Lloyd-George: Fifty-two in England and Wales and two in Scotland.

Mr. H. Hynd: Can the Home Secretary say how many of those were doctors?

Major Lloyd-George: No.

Mrs. Jeger: asked the Secretary of State for the Home Department if he will publish the evidence of the extent of heroin addiction in the United States of America and in other countries where the drug is already banned, which was submitted to him before he made his decision to ban heroin.

Major Lloyd-George: I will place in the Library a copy of the United Nations Summary of the Reports of Governments relating to Opium and Other Narcotic Drugs for 1953, the latest available.

Mrs. Jeger: In view of the figures which have been published of the extent of heroin addiction in the United States, can the Home Secretary tell the House


why he imagines that the proposed ban will have any effect on addiction in this country?

Major Lloyd-George: I am simple enough to believe that, if large numbers of countries think that to ban heroin is a good thing to get rid of this appalling scourge, the contribution made by this country would help in some way towards it. The fact that the figures for the United States are as high as they are does not seem to me to be a reason why we should not join with other countries.

Sir F. Messer: Is the Home Secretary aware that the published figures and the evidence available are no real indication of the widespread extent of addiction?

Sir R. Boothby: asked the Secretary of State for the Home Department whether, in view of the further protests which he has received from the Council of the British Medical Association, he will now reconsider his decision to prohibit the manufacture of heroin for medicinal purposes.

Miss Burton: asked the Secretary of State for the Home Department if he is aware of the disquiet among informed opinion owing to the Government decision to ban the manufacture, import or export of the drug heroin at the end of this year; and if he will make a statement.

Sir I. Clark Hutchison: asked the Secretary of State for the Home Department if he is aware that there is no adequate substitute for heroin in the treatment of certain cases; and if he will reconsider the decision to impose a ban on its production.

Sir R. Grimston: asked the Secretary of State for the Home Department if he will issue a White Paper on the proposed ban on the manufacture of heroin.

Major Lloyd-George: As regards the general question, I would refer to the Answer I gave on 1st December to a number of Questions by hon. Members.
As regards the particular Question by my hon. Friend the Member for Westbury (Sir R. Grimston), I am considering, in consultation with my right hon. Friends the Minister of Health and the Secretary of State for Scotland, the publication of a White Paper.

Sir R. Boothby: Arising out of that answer, in addition to considering the publication of a White Paper, will my right hon. and gallant Friend, together with his right hon. Friends the Minister of Health and the Secretary of State for Scotland, consider the possibility of carrying out a series of clinical tests, if possible under the auspices of the Medical Research Council, before he finally puts into effect the decision which he has taken?

Major Lloyd-George: I am afraid that I cannot commit myself in regard to the second part of my hon. Friend's supplementary question about carrying out clinical tests, but I will certainly talk to my right hon. Friends about it.

Miss Burton: Is the Minister aware that I put this Question down because a man came to me in great distress because his wife had had a very serious operation and was allergic to morphia and heroin was the only drug which gave her relief? Will this man be any easier in his mind as a result of the Government's decision? Can the Minister comment upon that aspect of the matter?

Major Lloyd-George: I do not think that the hon. Lady will expect me to comment upon that aspect by way of question and answer. This is an extremely difficult matter. As I have said in a Written Reply, most anxious consideration was given to it. There is no unanimity upon this question and, whatever decision was taken, I am bound to say that I never could see any unanimity upon it at all. In view of that fact, I think we have to take this step in order to help the international situation.

Sir R. Grimston: Will my right hon. and gallant Friend make it clear, in any statement or White Paper that he issues, that this ban will not prevent the use of existing stocks of heroin? Will there not therefore be an intervening period when tests can be made and medical opinion crystallised? Will my right hon. and gallant Friend give an undertaking that the Government will keep a close watch upon the matter, so that if the fears of a very large proportion of the medical profession prove to be right—and there is no proper alternative—the ban may be rescinded before the stocks of heroin have been exhausted?

Major Lloyd-George: Under the Dangerous Drugs Act the manufacture, import and export of dangerous drugs can be carried out only by licence of the Secretary of State. This ban simply means that the manufacture, import and export of heroin will cease, and that is all it means.

Sir I. Clark Hutchison: In giving further consideration to this matter, will my right hon. and gallant Friend take particular note of the views of general practitioners who are in day-to-day touch with patients who may require heroin?

Major Lloyd-George: This is more a matter for my right hon. Friend, but I should not like it to be thought that the members of the committee who advise him upon this matter are people who are out of touch with general practice. Of the twenty-nine persons who were on the committee, about nineteen are in fact engaged in daily practice.

Sir R. Boothby: I beg to give notice that I shall seek to raise this question on the Adjournment.

Mr. John Hall: asked the Secretary of State for the Home Department what account he took of the experience of other countries where a similar ban operates in deciding to ban the manufacture of heroin.

Major Lloyd-George: All relevant considerations were taken into account before I decided to impose the ban.

Mr. Hall: Would not my right hon. and gallant Friend agree that, from the evidence which we can obtain, it would seem that the banning of heroin in other countries has led to an increase and not a decrease in addiction? In view of the very little advantage that appears to be gained by the present proposal weighed against the amount of human suffering which might be involved, would he not consider this ban again?

Major Lloyd-George: I cannot accept the contention that imposing a ban has led to increased addiction in other countries. I have no information to confirm that at all.

Mr. W. Wells: asked the Secretary of State for the Home Department what representations have been made to him on behalf of the medical profession regarding

the proposed ban on the manufacture of heroin.

Major Lloyd-George: Representations have been made to me by the British Medical Association, the Medical Women's Federation, and on behalf of the medical staffs of fifteen hospitals or medical schools.

Mr. Wells: What action does the right hon. and gallant Gentleman intend to take on those representations? Does he consider that it is a proper function of the State to interfere with a doctor's freedom to prescribe?

Major Lloyd-George: I really do not think that we can take this very important matter much further by question and answer. We had better wait until we can consider the whole position. The idea that no consultation has taken place is quite contrary to the facts. The history of this ban did not start in 1954, as the document issued yesterday by the B.M.A. tried to indicate. It started in 1950.

Gypsies

Mr. Hyde: asked the Secretary of State for the Home Department the present Government policy in regard to the gypsy population of this country; and what circulars on this matter have been sent to chief constables in recent years.

Major Lloyd-George: I understand that this Question relates to suggestions which have appeared in the Press about police action against gypsies. Chief officers of police are responsible for enforcing the law, which applies to gypsies in the same way as to other people, and no circulars have been issued to them by my Department in recent years.

Mr. Hyde: Is my right hon. and gallant Friend aware that this small and defenceless community of approximately 20,000 people is in danger of having its spirit broken and of dying out in consequence of the harrying police methods to which its members have been subjected, especially in Kent? Will he therefore take steps, before it is too late, to save the remnants of a distinguished people who have been a characteristic feature of the English countryside since Elizabethan times?

Major Lloyd-George: I have made inquiries and cannot find any evidence


whatever that the action taken against gypsies is any different from the action taken against other people in similar circumstances.

Drunkenness (Young Persons)

Mr. A. Henderson: asked the Secretary of State for the Home Department whether he will now make a statement on his investigations into the problem of drunkenness among young persons.

Major Lloyd-George: Any increase in the number of convictions for drunkenness of young persons is a matter of great regret and concern. I am glad to say, however, that the number remains very small in proportion to the total number of young persons. The figures for 1954 were 124 offences among about 865,000 males under 17; 12 offences among 839,000 females under 17; 3,157 offences among 1,041,000 males aged 17 and under 21, and 209 offences among 1,107,000 females aged 17 and under 21.
The number of offences in any one police district is small, and the police, I am informed, have no reason to think that they indicate any tendency for juvenile drunkenness to assume serious proportions.
My inquiries have not disclosed any clearly apparent cause of the increases that have taken place. Such further inquiries as seem practicable will he made, and I shall, of course, continue to watch the situation closely.

Mr. Henderson: Has the attention of the Home Secretary been drawn to a report recently published in the Manchester Guardian which describes what I think most hon. Members would agree are disturbing conditions concerning drunkenness or excessive drinking by young persons, especially at dance halls? Has he any information on that aspect of the problem, and, if so, does he propose to take any steps with regard to it?

Major Lloyd-George: The right hon. and learned Gentleman will appreciate that I have to answer Questions a little later about dance halls. Those Questions are in rather a different category to the one which he asked. As I indicated in my Answer, I have had special inquiry made. I do not think that the figures which I gave support the contention that there is a very serious problem at the moment.

Mr. John Hall: Can my right hon. and gallant Friend say if there is a greater proportion of drunkenness among young people in Carlisle than in other parts of the country?

Mr. de Freitas: Is the Home Secretary aware that many social workers and statisticians are critical of the figures which are given, as they do not disclose the nature of the problem? Will he consider whether more useful figures could be compiled?

Major Lloyd-George: Yes.

Mrs. Ruth Ellis (Execution)

Mr. Hyde: asked the Secretary of State for the Home Department if he is aware that the prisoners and staff in Holloway Prison were greatly disturbed, shortly before the execution of the late Mrs. Ruth Ellis, by the noise caused through hammering in the erection of the scaffold on which she was subsequently hanged; and whether he will take steps to prevent inconveniences of this kind in future in all Her Majesty's Prisons where executions are carried out.

Major Lloyd-George: My hon. Friend is under a misapprehension. No scaffold was erected in Holloway prison before the execution of Mrs. Ellis.

Mr. Hyde: Is my right hon. and gallant Friend aware that what he has just said will reassure those members of the public who were alarmed at a statement to the contrary sense made by the Bishop of Stepney, who visited Mrs. Ellis shortly before her execution?

Occasional Licences (Dance Halls)

Mr. Royle: asked the Secretary of State for the Home Department if he will introduce legislation whereby intoxicants may not be obtained in dance and public halls by boys and girls under the age of 18, as in the case of public houses.

Major Lloyd-George: An occasional licence for the sale of intoxicating liquor on unlicensed premises may only be granted with the consent of the justices, and my information is that this enables the justices to exercise an effective measure of control. Should there be substantial evidence to the contrary, however, I should certainly be ready to consider legislation.

Mr. Royle: Would the right hon. and gallant Gentleman agree that there are a great number of anomalies in the licensing law? Does not he think the time has come when he might introduce a Miscellaneous Provisions Bill to cover many of them? In reference to what the right hon. and gallant Gentleman said to my right hon. and learned Friend the Member for Rowley Regis and Tipton (Mr. A. Henderson), is it not a fact that the figures he gave are based on convictions and that there are many cases of disturbances of this kind which never reach the courts?

Major Lloyd-George: I would not dispute that. The hon. Gentleman will appreciate that it is not always easy to obtain precise information about this sort of thing. I have made such inquiries as are open to me and have given the best information available, and I am prepared to look at the matter.

Mr. Royle: Would the Minister answer my supplementary question?

Major Lloyd-George: I have given the hon. Gentleman an answer; if there is substantial evidence to the contrary, I will consider legislation.

Mr. Ede: Does the first answer of the Home Secretary mean that unless the justices insert a condition in the occasional licence that persons under eighteen shall not be served, it is legal for the person holding the occasional licence to serve them?

Major Lloyd-George: No. I had in mind that there was a remedy. If there were occasions of misconduct of that sort, the remedy would be in the hands of the justices when it came to issuing licences in the future.

Convicted Persons (Consorting)

Mr. Burden: asked the Secretary of State for the Home Department if he will consider introducing legislation on the lines of that successfully tried in Victoria, Australia, under which individuals habitually consorting with convicted criminals were liable to arrest and punishment.

Major Lloyd-George: No, Sir.

Mr. Burden: While agreeing that the liberty of the subject must be jealously preserved, would not my right hon. and gallant Friend agree that where known

criminals consort together on race courses and in other places in order to create trouble, it would be a good thing were some action to be taken?

Major Lloyd-George: I do not think that would meet with much support in this House. It is quite contrary to our legal system. So far as I understand it, apparently it would be up to a man who is consorting to prove that his consorting was innocent. A father might be consorting with his son who had just been released from prison, and he would have to prove that the consorting was innocent. I do not think that idea would be very acceptable in this country.

Motor Vehicles (C.D. Plates)

Mr. Burden: asked the Secretary of State for the Home Department what instructions are given to police officers in the Metropolitan area in questioning the owners of motor vehicles which bear C.D. plates.

Major Lloyd-George: No instructions have been issued on this point.

Mr. Burden: Is my right hon. and gallant Friend aware that police officers accept the C.D. plates as prima facie evidence that the cars are the property of members of the Diplomatic Corps? Does he not agree that people not entitled to diplomatic privileges use these plates in order to gain some benefit; that this is a growing habit and that steps should be taken to stop it?

Major Lloyd-George: The display of C.D. plates on a motor car confers no immunity on the driver, the car or its owner. I wish to make that perfectly clear.

Mr. H. Morrison: This question has also arisen with the Foreign Office, and I cannot understand the position of the Government. Is it not the case that there can be only one purpose for putting C.D. plates on a car—the hope that the police will feel rather benevolent towards the driver? Would not the right hon. and gallant Gentleman agree that it is misleading and that the plates are put on the vehicles without any authority whatever? Ought not the Government to do something to prevent the use of a C.D. label, indicating the Diplomatic Corps, by persons who are not members of the


Diplomatic Corps? I beg the right hon. and gallant Gentleman at any rate to promise to reconsider it.

Major Lloyd-George: I am not anxious to interfere in matters where it is not necessary to do so. We have had no complaints about these_ C.D. plates at all, and no immunity is given to the driver, the car or the owner of the car by the fitting of C.D. plates on the vehicle. I have had no complaints, but if there were complaints it might be a different matter. After all, some people put G.B. plates on their car for no reason at all, except that it looks nice. I do not know, but it may well be that some people think there is some value attached to having C.D. plates on their cars.

Mr. Morrison: Is it not the case that recognised members of the Diplomatic Corps, or at any rate those in a certain position, are not prosecuted? I think that is the case. Surely, the purpose of these unauthorised people who put C.D. plates on their car must be to get some more friendly treatment from the police in the event of an offence being committed? Is it not the duty of the Government to look into the matter?

Major Lloyd-George: I have no evidence at all on the subject, and I do not want to interfere in matters where no interference is necessary until I get some evidence of abuse. The fact is that a person enjoying diplomatic privileges can claim immunity from prosecutions, but he cannot claim immunity from the attentions of the police. Were there evidence of gross abuse in this matter regarding speeding and other things, I might consider action, but I have no such evidence.

Mr. Burden: asked the Secretary of State for the Home Department what complaints have been made to his Department about the greatly increased number of cars in London that bear C.D. plates.

Major Lloyd-George: I can find no trace of recent complaints.

Mr. Burden: If that be the case, will my right hon. and gallant Friend keep his eyes open, when I am sure he will agree that the numbers are growing? Will he go out, or get someone else to go out, and question the ordinary policeman on the beat about this, as I have done? Is

he aware that they will certainly tell him that they accept C.D. plates as prima facie evidence that the people using them are members of the Diplomatic Corps and that they approach these people with that in mind?

Major Lloyd-George: My hon. Friend asks me to keep my eyes open, and I propose to ask him to do the same. The question was:
… what complaints have been made to his Department. …?
My answer is that I can find no trace of recent complaints.

Mr. Burden: They have been made in this House.

Charitable Trusts

Mr. V. Yates: asked the Secretary of State for the Home Department whether he is aware that a number of charitable trusts are unable to carry out the functions for which they were originally designed; and whether Her Majesty's Government will consider introducing legislation at an early date to obviate the difficulties experienced by such trusts.

Major Lloyd-George: The White Paper on Government Policy on Charitable Trusts in England and Wales (Cmd. 9538) sets out the nature of the legislation which Her Majesty's Government consider to be required. The preparation of such legislation will take some time, and I can hold out no hope of its introduction in the present Session.

Mr. Yates: Will the Home Secretary consider the importance of speeding up this matter? Is he aware that there is such a charitable trust in Birmingham, with valuable resources in land and investment income, which cannot fulfil its function of caring for deprived children because it is not in accordance with the function originally suggested, and now that they are anxious to do work of vital importance—

Mr. Nabarro: On a point of order, Mr. Speaker. It will be within your recollection that on three occasions recently you have reprimanded me for giving a modicum of information in a supplementary question As the last three supplementary questions have been of excessive length and consisted of nothing but the giving of information, may we have a further restriction on this?

Mr. Speaker: I agree that they have been somewhat lengthy, but I am always buoyed up by the hope that the supplementary question is coming to an end sooner than it does.

Mr. Yates: If I spent half as much time as the hon. Member—

Mr. Speaker: Order. The hon. Member asked a supplementary question. Does the right hon. and gallant Gentleman wish to reply to it?

Major Lloyd-George: I was not sure that the hon. Member had come to the end of his supplementary question.

Mr. Yates: Further to that point of order. I was putting my final point. Will the Minister not take into consideration the case that I have mentioned? It is vital that legislation should be brought in earlier.

Major Lloyd-George: I certainly will do everything I can to expedite this matter, but the hon. Member will appreciate, from his knowledge, that it is an extremely complicated affair and that legislation will take a considerable time to prepare.

Mr. Woodburn: Some time ago, as I understand it, the Government promised me that they would look into the question and try to find how many of these charitable trusts existed. The whole country is peppered with offices, some of which are suspected of belonging to long-since defunct charities. Is the Minister prepared to try to find out how many of these trusts are carrying out obsolete functions and using property which could be used for better purposes?

Mr. Speaker: That is another question altogether.

Executions

Mr. V. Yates: asked the Secretary of State for the Home Department, in view of the fact that a representative of Her Majesty's Government is not required to be present at the execution of persons condemned to death, whether he will undertake to be present at all future executions.

Major Lloyd-George: No, Sir.

Mr. Yates: Does not the Home Secretary consider that as certain persons are required to be present, namely, a minister

of religion and a doctor, the Home Secretary—who has the responsibility of writing across the papers, "The law must take its course"—is under a moral obligation to be present in such cases to see that the law is carried out in the name of this House?

Major Lloyd-George: I have nothing to add to my Answer.

Drugs

Dr. King: asked the Secretary of State for the Home Department the number of prosecutions for peddling in drugs for the latest available year.

Major Lloyd-George: During 1954 there was one conviction under the Dangerous Drugs Act, 1951, for offering to supply drugs. There were 218 other convictions under the Act, the majority of which were for unlawful possession of drugs, but it is not possible to say in how many of these cases the drugs would have been sold to another person.

Dr. King: Is the Minister aware that although the figures which he has given this afternoon show that the main ravages of the drug menace are outside this country, many of us are behind him and the Government in their linking up with other nations in a universal effort to stamp out this evil?

Mr. Gower: asked the Secretary of State for the Home Department what evidence he has obtained of an increase in the traffic and use of illegal drugs in the United Kingdom; and if he will make a statement.

Major Lloyd-George: Whilst I have no evidence of any serious increase in illegal traffic in or use of drugs in this country, there has been some increase in the traffic in Indian hemp, and I am watching this development closely.

Mr. Gower: In view of the 216 convictions for this offence, can my right hon. and gallant Friend say whether he has any reason for believing that new methods of smuggling these drugs into the country are being adopted?

Major Lloyd-George: I am afraid I could not answer that question without notice. I am glad to say that the figures for the first part of this year show a decrease, which is satisfactory.

Mrs. L. Jeger: asked the Secretary of State for the Home Department what representations he has received from the World Health Organisation about the advisability of banning other drugs in addition to heroin.

Major Lloyd-George: The Eighteenth Session of the Economic and Social Council, which recommended the banning of heroin, also urged governments to prohibit the manufacture, import and export of ketobemidone, and urged countries in which cannabis preparations are still being used to explore the possibility of discontinuing their use as rapidly as possible. Ketobemidone, which I am informed is an exceptionally addicting synthetic drug, has never been used in this country, and I do not propose to licence its import or manufacture here unless it is required for scientific purposes. Cannabis is used in small quantities as colouring matter in corn plasters and corn paints. I am informed that its use is on the wane. I do not propose to take any action at present to prevent its use.

Mrs. Jeger: Is the Home Secretary aware of a Press report of 9th September indicating that the World Health Organisation had asked his right hon. Friend the Minister of Health to inform doctors of the addiction dangers of pethedine, and can he assure the House that he is not proposing to deprive the public of this drug also?

Major Lloyd-George: I think that the hon. Lady should put down a Question to my right hon. Friend about that.

Metropolitan Police (Allegations)

Mr. Shinwell: asked the Secretary of State for the Home Department whether, in view of allegations recently made about the conduct of the police, and in order to allay suspicions respecting their integrity, he will cause a public inquiry to be made, both in the interests of the force and the public.

Mr. Lewis: asked the Secretary of State for the Home Department whether he is aware that there is public disquiet at the allegations made of bribery and corruption among certain London policemen; and whether, in order to allay public anxiety and to satisfy the honour and dignity of the police force, he will cause a public inquiry to be held into the existing vice and other rackets prevalent in

London, and the allegations made against the police.

Major Lloyd-George: I regret that anxiety should have been caused by statements of a general nature which are quite unwarranted, but this is no reason for holding a roving inquiry into the general conduct of the Metropolitan police, a force of which this country is justly proud.

Mr. Shinwell: Is the right hon. and gallant Gentleman aware that, far from making any allegations against the conduct of the police, I regard them as being, on the whole, a well-behaved and responsible body of people? In view of recent incidents which have caused some public disquiet, however, if the right hon. and gallant Gentleman does not see his way to causing a public inquiry to be made, will he himself institute Departmental inquiries and afterwards report the facts to the House so far as he is able?

Major Lloyd-George: As the right hon. Gentleman knows, this matter has already been the subject of inquiry. What I meant in my answer is that sweeping and grossly inaccurate statements were made about the force in general, whereas the actual inquiry concerned only a small number of people. That inquiry has been carried out and certain steps have been taken, as the right hon. Gentleman knows. I do not think it is right that we should have general public inquiries into all statements, however ludicrous, which are made.

Mr. Shinwell: Was not the recent inquiry conducted by the Commissioner of Police? Surely he ought to go a step beyond that. Will not the Minister himself take charge of such an inquiry, or appoint an impartial person to conduct it and, so far as is practicable, then report to the House, in order to remove any disquiet that exists?

Major Lloyd-George: Naturally want to remove any disquiet that may exist. At the same time, I have a certain responsibility in this matter. The disciplinary head of the police force is the Commissioner. Upon the receipt of a complaint, the first step taken is an inquiry by the Commissioner. That was in fact carried out. I am satisfied that


the allegations—which were grossly distorted—have, as a result of that inquiry, been very fully investigated, and the steps taken have been to my entire satisfaction.

Mr. Lewis: If the Minister will not agree to a general inquiry, will he agree to one in relation to the West Central Police Station? Is he aware that many policemen on the beat would welcome an inquiry? I think I am also correct in saying that the Police Federation itself would not be against such an inquiry in regard to that station.

Major Lloyd-George: Here again I am bound to come back to this Press statement. The hon. Member speaks as though he believed the original statement made in the newspaper about C Division, in which is was said that 450 men were to be transferred. I am not sure that that number is not greater than the whole strength of C Division. The fact is that the report to which I have referred concerned eight people. The matter has been fully investigated, and that was the whole basis of the article which made such sweeping statements.

Mr. Lewis: asked the Secretary of State for the Home Department whether the statement made by the Commissioner of Police on Thursday, 1st December, concerning the investigations into allegations of bribery and corruption among certain London policemen, carried out by Superintendent Hannam, was made with his authority: and whether he will make a statement.

Major Lloyd-George: The Commissioner's statement was made with my authority and I do not think I can usefully add to it.

Mr. Lewis: Will the Home Secretary consider putting Superintendent Hannam's Report in the Library for the convenience of hon. Members?

Major Lloyd-George: No, Sir—certainly not. It would be quite impossible to have police reports put in the Library of this House.

Mr. Lewis: asked the Secretary of State for the Home Department whether he will give details of the petitions he received from prisoner Joseph Grech making charges and allegations of bribery and corruption against certain police

officers; what action he has taken; and whether he will make a statement.

Major Lloyd-George: The statements made in petitions by Joseph Grech were referred to the Commissioner of Police for investigation. The substance of the allegations and the results of the investigation were given in the Commissioner's statement of 1st December, and I have nothing to add to it.

Mr. Lewis: Was any opportunity given to this prisoner to add to his written information by obtaining the services of counsel and getting legal advice? Did he ask for it, and, if he had done so, would it have been granted?

Major Lloyd-George: If the hon. Member wants details he should put down a Question.

Children (Dangerous Weapons)

Mr. Fenner Brockway: asked the Secretary of State for the Home Department if he will reconsider his decision not to introduce legislation to prohibit the use of bows and arrows in a public place, except under responsible supervision, in the light of the facts brought to his notice by the hon. Member for Eton and Slough and the evidence of accidents to the eyes of young children from their use.

Major Lloyd-George: I have considered with sympathy the further letters which the hon. Member has sent to me, but have nothing to add to the reply which I gave to him on 24th November.

Mr. Brockway: Is the right hon. and gallant Gentleman aware that I am not asking for the prohibition of the toys; indeed, I am all in favour of Robin Hood; but that this should be practised under some supervision? Has not the right hon. and gallant Gentleman received from me information about a case in my constituency where a child lost an eye, and is he also aware that I hold in my hand letters from other parts of the country from parents of children who have lost their eyes? Is he prepared to come to the head doorkeeper to see one of these weapons, which I have not been allowed to bring into the House?

Major Lloyd-George: The hon. Gentleman may be surprised to learn that I have seen a bow and arrow at some time or another, and indeed I have used one


too. I do not think we should legislate against every kind of boyish prank. Accidents will happen, and it is quite impossible to cover them all by legislation. I think we can leave this one alone.

Mr. Bustani (U.K. Visits)

Sir L. Plummer: asked the Secretary of State for the Home Department under what permits Mr. Emile Bustani, a Lebanese, enters this country; how many visits he has paid during this year; and what is the purpose of his visits.

Major Lloyd-George: Mr. Bustani has made seven short visits to this country during this year on visas authorised abroad. According to the information given to the immigration officer, five of these were business visits, one was in transit, and one was an official mission.

Sir L. Plummer: While not wanting to interfere with the liberty of a man to express himself when he comes to this country to put his country's point of view, may I ask the Home Secretary to make representations to Mr. Bustani that when he comes here again he expresses himself with moderation so as not to give offence to many citizens of this country?

Major Lloyd-George: I have no idea what the hon. Gentleman is referring to. Perhaps he will be good enough to let me know and I will certainly look at it. One day we are criticised for not letting people in and another day for letting them in.

Mr. Stokes: Is the right hon. Gentleman aware that Mr. Bustani is a Member of Parliament for the Lebanon and is a highly reputed citizen in that country?

Mr. Shinwell: Is he also aware that Mr. Bustani indulges in offensive propaganda when he comes to this country on behalf of the Arab States against the State of Israel?

Major Lloyd-George: Having heard these three questions, I cannot help feeling that it is a good thing that my immigration officers are non-political.

Hackney Carriage Laws

Dr. King: asked the Secretary of State for the Home Department whether he has now considered the Report of the Working Party on Hackney Carriage Law in the Provinces; and if he will carry out its recommendations.

Mr. Fenner Brockway: asked the Secretary of State for the Home Department if he has now reached a decision regarding the recommendation of the Hackney Carriages Committee that station ranks should be open by rota to taxi-cabs occupying nearby ranks.

Major Lloyd-George: I would refer the hon. Members to the answer which I gave on 27th October to a Question by my hon. Friend the Member for St. Marylebone (Sir W. Wakefield).

Dr. King: Is the right hon. and gallant Gentleman aware that the Report of the Working Party has been before him for a long time now and that it contains a number of recommendations which are welcomed not only by the hire-cab industry but by hon. Members on both sides of the House? Will he therefore expedite the bringing forward of proposals to carry out some of these recommendations and at the same time bear in mind the 30-year-old report of his predecessors which would give him the opportunity of dealing with the menace of the pirate in the taxi industry?

Mr. Brockway: Did not the right hon. and gallant Gentleman say in the House of Commons before the Summer Recess that he would give attention to these recommendations and would make a statement? Will he at least proceed with the very simple proposal that station ranks should be open to all taxicab drivers who wish to use them?

Major Lloyd-George: I have dealt with that particular part of the Report before, as the hon. Member for Eton and Slough (Mr. Brockway) knows. The fact of the matter is that these are very lengthy reports and do not deal only with that particular subject. It will take time to go through them. I will expedite it. If the hon. Gentleman cares to ask me a Question later, I will give him what information I can.

Young Persons (Remand Centres)

Mr. de Freitas: asked the Secretary of State for the Home Department how many unconvicted persons between the ages of 17 and 21 years were remanded in prison and subsequently sentenced to a term at a detention centre during the last three months.

Major Lloyd-George: The number of persons between 17 and 21 years of age convicted between 1st August and 31st October, 1955, who had been remanded in prison before being sentenced to detention was 14.

Mr. de Freitas: Were not detention centres meant to be an alternative to prison, and is it not a confession of failure that there are not enough remand centres for these unconvicted young people to be sent to? What is the Home Secretary going to do about it?

Major Lloyd-George: In some cases, it may well be, they were remanded in custody until the magistrates had decided what they should do. They could be either on bail or not, according to the circumstances. The magistrates alone are the ones to decide. The number remanded was about 36 between 17 and 21 in the three months. It is for the magistrates to decide what they should do, whether to send them to detention centres or not.

Mr. de Freitas: Is it not a fact that these young people are unconvicted and remanded in prison, which is contrary to the intentions of Parliament in the Act?

Major Lloyd-George: If the hon. Gentleman has any specific case and will let me have particulars of it, I shall be very glad to look into it. So far as I can make out, it is for the magistrate to decide what he is going to do with the unconvicted young person. I shall be glad to look into the matter.

Aliens

Mr. de Freitas: asked the Secretary of State for the Home Department what changes he has made in the immigration regulations in respect of aliens who no longer require a visa for entry to this country but who ask at our consulates abroad for some indication as to their chances of being refused admission on arrival here.

Major Lloyd-George: There has been no change of practice. An alien who does not require a visa to enter the United Kingdom but seems to a visa issuing officer to be unlikely to be given leave to land would normally be so advised.

Mr. de Freitas: Since nowadays an alien from many countries does not need to have a visa and is under the liability

of being refused admission when he gets here, could not the regulations be changed so that he can be given that advice when he applies to the consul?

Major Lloyd-George: The ultimate decision for leave to land in the United Kingdom is a matter for the immigration officer and the visa officers are circularised and asked to help in any way they can. The very fact that a visa issuing officer says he thinks he may probably get in is not sufficient to let him in, although it will be a great help to the immigration officer when he examines him. The decision must rest with the immigration officer.

Prostitution and Betting, Newcastle-upon-Tyne

Mr. Popplewell: asked the Secretary of State for the Home Department how many prosecutions have taken place, during the last 12 months, at Newcastle-upon-Tyne, against keepers of brothels, persons living on the earnings of prostitutes, persons for importuning, also against keepers of betting houses; and if he will give comparable total figures for each group for the previous six years.

Major Lloyd-George: With the hon. Member's permission, I will circulate a table in the OFFICIAL REPORT.

Mr. Popplewell: Will the right hon. and gallant Gentleman say whether Newcastle, which he and I have in part the honour to represent, is any worse than any comparable city of this size in this direction?—I do not think it is. Will he also say whether in the last 12 months there have been more prosecutions than in the previous six years; and could he give reasons why and try to split his reply up into the respective police divisions?

Major Lloyd-George: Yes. I think the hon. Member will find that the report has been split up into divisions. I am sure that he will be interested to know that in my own division there are no cases at all.

Mr. Stokes: Are the Messina brothers mixed up with any of these places in Newcastle?

Major Lloyd-George: I did not know they were still here. There is no evidence.

Mr. Stokes: They are still here.

Major Lloyd-George: So the right hon. Gentleman says, but I am still awaiting


his evidence on that. It will come some day, I have no doubt. Judging by the figures given here, I could hardly think it is a profitable area for the Messina brothers.

Mr. Popplewell: Has there been a larger number of prosecutions during the past 12 months than in the previous six years?

Major Lloyd-George: I believe there has been an increase with regard to importuning, but I am told that that has been due very largely to a change in the attitude of the courts.

Year ended 30th November
Permitting, assisting, and keeping brothels
Living on the earnings of prostitution






Western Divn.
Central Divn.
Eastern Divn.
Total
Western Divn.
Central Divn.
Eastern Divn.
Total


1949
…
…
…
—
—
—
—
—
—
—
—


1950
…
…
…
—
—
—
—
—
—
—
—


1951
…
…
…
—
—
—
—
—
—
—
—


1952
…
…
…
—
—
—
—
—
—
—
—


1953
…
…
…
—
—
—
—
2
—
1
3


1954
…
…
…
—
—
—
—
1
—
—
1









(a)






1955
…
…
…
6
—
—
6
5
—
—
5

Visas

Mr. Swingler: asked the Secretary of State for the Home Department in how many cases in each of the last three years he has refused to grant visas to enter the United Kingdom to the foreign husbands of British citizens.

Major Lloyd-George: Immigration statistics are not kept in a form that would enable me to give this information.

Mr. Swingler: As these citizens fall into a special category, will not the Home

Mr. Stokes: The Minister implies that I have not sent him the evidence. Will he take the trouble to read my last letter to him, to which, as far as I know, I have never had a reply?

Major Lloyd-George: The right hon. Gentleman's memory is not as long as it ought to be. I invited him to come and give evidence, as he seemed to know everything about it, and the obvious thing was that he should give evidence to the committee. The committee is still waiting for the right hon. Gentleman.

The following is the table:

Secretary make further inquiries? Does he not agree that especially sympathetic attention should be given to these cases where a British wife and her foreign husband wish to live in the United Kingdom? As it is obvious that he has turned down quite a number of such cases, will he not make a review in his Department to see how many are involved and give sympathetic consideration?

Major Lloyd-George: In the first place, I cannot accept the remark that we have turned down so many cases—quite the


contrary. The attitude of the Home Office is a very liberal one, and these people are treated with every possible consideration. I gave an answer to the case which the hon. Member has in mind, and I have nothing to add to it.

School of Planning and Research for Regional Development

Mr. MacColl: asked the Secretary of State for the Home Department whether he will publish the names known to him of Communist influences in the former School of Planning and Research for Regional Development.

Major Lloyd-George: I would refer the hon. Member to the reply which I gave on the 1st December to the hon. Member for Orkney and Shetland (Mr. Grimond).

Mr. MacColl: Does not the right hon. and gallant Gentleman realise how very unfair that reply was? Does he not appreciate that not only does this kind of promiscuous smear cause very grave pain to people who were connected with the school, but that the chairman of this board has just been appointed by the Prime Minister to a Royal Commission, and that the vice-chairman, a noble Lord, is, I believe, a brother of a Conservative Member of this House? Would he not convey to his hon. Friend who made the original remark that it was irrelevant, inaccurate, thoroughly mischievous and damaging?

Major Lloyd-George: I can only recommend the hon. Gentleman to look again at my Answer, when he will find that a lot that he has said is quite inappropriate.

Passport Examinations

Mr. E. L. Mallalieu: asked the Secretary of State for the Home Department whether, in order to remove from the minds of visitors to the United Kingdom the feeling that they are being cold-shouldered, he will end the practice of separating passengers arriving at the ports into two streams, British and foreign, for passport examination.

Major Lloyd-George: No, Sir. It has been found that, where large numbers are involved, this practice is in the best interests of the passengers as a whole.

Mr. Mallalieu: Is the right hon. and gallant Gentleman aware that the more civilised countries of Europe do not follow this practice and that he is really

being led by the nose in this less civilised practice by the United States of America?

Major Lloyd-George: I was not aware that there were any more civilised countries in Europe than this country. We are always getting complaints about delays in getting people off ships, and it has been found that, by this splitting, the passengers—who, after all, are the first consideration, and whose convenience is very important—are dealt with more quickly. Whilst the Home Office has no particular desire one way or the other, from the point of view of the passengers' convenience this is much the better way.

Police Forces (Establishment and Recruitment)

Mr. P. Williams: asked the Secretary of State for the Home Department the total establishment for all police forces in England and Wales; the present numbers employed; and what action he intends to take to make good the full numbers.

Major Lloyd-George: On 31st October, 1955, the total authorised establishment of police forces in England and Wales was 75,516, and the actual strength was 65,603. Pay and conditions of service are now negotiated on the new Police Council for Great Britain. I hope to lay before the House for approval early in the New Year a comprehensive scheme for improved pensions for police widows. Police authorities are pressing forward the provision of police houses, and in certain forces increased attention is being given to the recruitment of police cadets. Improved facilities are being provided at the Police College for those likely to reach the most senior posts, which are now open without discrimination to all men entering the service.

Mr. Williams: Is my right hon. and gallant Friend aware that most people will very much welcome his statement about pensions which will be made later on—

Mr. Speaker: Mr. Snow.

Mr. Williams: Might I continue my supplementary question?

Mr. Speaker: I thought the hon. Member was saying how welcome the Answer was.

Mr. Williams: Will my right hon. and gallant Friend further consider an investigation into the mis-employment of police


on certain duties outside their normal functions, such as putting traffic tickets on cars parked in roads?

Major Lloyd-George: I will certainly look into that, but my hon. Friend will no doubt realise that one of the most serious additional duties which the police have been forced to perform has been caused by traffic problems.

Oral Answers to Questions — GERMAN REUNIFICATION (FOREIGN SECRETARY'S SPEECH)

Mr. Zilliacus: asked the Prime Minister whether the Foreign Secretary's speech at Wembley on 21st October, relating to the need, if the Geneva talks failed, to maintain pressure on the Union of Soviet Socialist Republics until it gave way, represents the policy of Her Majesty's Government.

The Prime Minister (Sir Anthony Eden): My right hon. Friend in his speech expressed the opinion that if on political grounds the Soviet Government declined to agree to German reunification at Geneva, there would then be no quick results but we should still have to persist in our efforts to secure it. That is the policy of Her Majesty's Government.

Mr. Zilliacus: Is not the Prime Minister aware that the Foreign Secretary said that we should have to continue to lean up against the Russians until they gave way; that they had done so in the case of Austria and would do so again? If that does not mean pressure by superior military power, does it mean that we favour direct negotiations, on the Austrian model, between the Germans and the Russians for unification on a basis of neutrality?

The Prime Minister: I have read my right hon. Friend's speech, but there was not a word about military pressure from beginning to end. My right hon. Friend used the analogy of Austria, which was quite a good analogy to use.

Mr. Daines: Does the Prime Minister think that the recent speeches of Mr. Khrushchev and Marshal Bulganin give an example of moderate statement to which we can aspire?

Oral Answers to Questions — NATIONALISED INDUSTRIES (SELECT COMMITTEE'S REPORT)

Mr. Nabarro: asked the Prime Minister, in view of the abortive nature of the work of the Select Committee on Nationalised Industries, what steps are being taken to secure Parliamentary accountability for State electricity, State gas, the Atomic Energy Authority, the North of Scotland Hydro-Electric Board and other State corporations, accounts and reports for which relate to chargeable accounting periods ended up to nine months ago, and which have not yet been subject to any form of Parliamentary scrutiny; and whether he will make a statement.

Mr. H. Fraser: asked the Prime Minister whether he will move to amend Standing Order No. 16 in such a way as to increase the number of allotted days and to provide that such extra allotted days be reserved for debate on the nationalised industries and enterprises.

The Prime Minister: As I told the House last week, we propose to make an announcement soon about the situation arising from the Special Report of the Select Committee on Nationalised Industries. As regards the suggestion for the amendment of the Standing Order, I do not think that to increase the number of allotted Supply days is the right answer to this particular problem. In all circumstances, I would ask my hon. Friends to await the announcement I have mentioned.

Mr. Ernest Davies: Will the House be given an opportunity to debate the Report before the Government reach their final decision on the matter?

The Prime Minister: I do not know that I can give that undertaking, but this is a matter about which I think there would be discussion through the usual channels.

Mr. Renton: Does not my right hon. Friend's reply indicate that there are already not enough days in the Parliamentary year for controlling the numerous activities of the State and that, therefore, the activities of the State should be reduced to such an extent as will enable Parliament to exercise effective control?

The Prime Minister: That may be so, but what I have been asked is whether there should be an additional number of Supply days. I was pointing out that I was doubtful whether Supply days, which have a special connotation, are suitable for this kind of discussion.

Oral Answers to Questions — PRIVATE NOTICE QUESTIONS

Mr. Emrys Hughes: I should like respectfully to ask for your Ruling, Mr. Speaker, upon the circumstances in which Questions may be asked by Private Notice. You will be aware that this morning I submitted for your consideration a Private Notice Question which read—

Mr. Speaker: Order. The hon. Member must know that it is out of order to try to introduce as a point of order a Question which has been disallowed. That is an old rule of the House. As to the procedure, it is entirely a matter for my discretion. I have to judge the urgency and the public importance of the matter. If the hon. Member quarrels with my decision on the matter, there is a way of challenging it, but it cannot be argued here.

Mr. Hughes: I followed your advice, Mr. Speaker, and proceeded to put the Question on the Order Paper. As we are not allowed to put Questions to the Admiralty until a week next Wednesday, what is my remedy so that I may ask that a statement be made about a fire at the Admiralty?

Mr. Speaker: Whatever may be the hon. Member's remedy, it is not the one which he is trying to apply. The best advice I can give him is to study with care the Written Reply which he will no doubt receive in due course if he does not get an Oral one.

Mr. S. Silverman: Further to that point of order, Mr. Speaker. It has been the experience of Parliament over very many years that when public disasters occur, Private Notice Questions have regularly been asked about them so that the Minister concerned may take an early opportunity of informing the House of the circumstances. My hon. Friend has indicated the subject-matter of his Private Notice Question, and it would seem that this is the kind of public occasion on

which in the past Private Notice Questions have been allowed.

Mr. Speaker: The hon. Member must realise that it is for me to judge the scale of importance of these matters. I came to a quite different conclusion on the matter from that of the hon. Member.

BUSINESS OF THE HOUSE

Mr. H. Morrison: Mr. H. Morrison rose—

Hon. Members: Hear, hear.

Mr. Morrison: I have not the least idea what all these cheers are about. May I ask the Leader of the House whether he would state the business which the Government propose to submit next week?

The Lord Privy Seal (Mr. Harry Crook-shank): Yes, Sir. The business for next week will be as follows:
MONDAY, 12TH DECEMBER—Debate on the Middle East, which will take place on the Motion for the Adjournment of the House.
TUESDAY, 13TH DECEMBER—Third Reading of the Finance Bill.
Second Reading of the Agricultural Research Bill.
WEDNESDAY, 14TH DECEMBER—Committee stage of the Housing Subsidies Bill.
THURSDAY, 15TH DECEMBER—Second Reading of the Valuation and Rating (Scotland) Bill.
Committee stage of the necessary Money Resolution.
FRIDAY, 16TH DECEMBER—Consideration of Private Members' Motions.
If satisfactory progress is made with outstanding business, it is hoped to adjourn for the Christmas Recess on Wednesday, 21st December, until Tuesday, 24th January next.

Mr. Morrison: Can the right hon. Gentleman say when the Government propose to produce the intended Bill on road transport—in respect of the lorries—and whether we shall be likely to have the White Fish Subsidy Scheme and the debate on it before the Recess?

Mr. Crookshank: On the first point, I have no statement to make. On the second point, I hope that we may be able to take that business.

Mr. Morrison: I do not know whether the right hon. Gentleman can tell us whether he is in trouble on the first point, concerning lorries. Would he like to take us into his confidence and indicate whether he has trouble within his ranks about it, because we might be able to help him? Might I also ask him whether he can make any statement about the proposed debate on agriculture?

Mr. Crookshank: No, Sir. I said last week that I did not see any likelihood of having a debate on agriculture this side of Christmas.

Mr. Woodburn: Is the right hon. Gentleman aware that Part II of the Teachers (Superannuation) Bill, which has just had its Second Reading, refers exclusively to Scotland and Part I exclusively to England and Wales? Would it not be for the convenience of hon. Members on both sides of the House, and both sides of the Border, if Part II could, as was done on a previous Bill, be referred to the Scottish Standing Committee? Will the right hon. Gentleman give consideration to that point?

Mr. Crookshank: I am not sure that it would be to the general convenience to split up a Bill of this kind. In this instance, the same system applies to both countries. Therefore, it is reasonable that it should go to a Committee in the ordinary way, as it is a United Kingdom matter.

Mr. Woodburn: Is the right hon. Gentleman aware that, if the Bill goes to one of the ordinary Standing Committees, it will be impossible for many Scottish hon. Members to take part in its proceedings; and a considerable number on both sides of the House are interested in it? Would it not facilitate progress if the two Standing Committees were marching together, as they did on a previous occasion? Will the right hon. Gentleman reconsider the matter? There was a separate Bill on the last occasion.

Mr. Crookshank: I do not know the "last occasion" to which the right hon. Gentleman is referring, unless it was the occasion of the Measures dealing with local government. In that case, the systems in the two countries were different, and that was why a division was made. I do not think it would be to the convenience of hon. Members if the present Bill were divided.

Mr. Woodburn: Is the right hon. Gentleman aware that on a previous occasion when we were dealing with superannuation legislation there were two separate Bills? While we are not denying the convenience to the Government of having everything in one Bill, we suggest that hon. Members from both countries, for their convenience, should be allowed to discuss their business in their separate Committees.

Mr. Crookshank: If there were two separate Bills on a previous occasion, it was no doubt because they dealt with two rather different aspects of the subject, whereas in this case it is the same subject which is under consideration.

Mr. Mason: Will time be found before the Recess to debate the issue of the cessation of thermo-nuclear tests and the allied question of the visit of the Prime Minister to President Eisenhower on 30th January?

Mr. Daines: May I ask the Leader of the House whether we are to have a day to debate foreign affairs generally before the Recess, in view of the aftermath of Geneva and also the coming visit of the Prime Minister and the Foreign Secretary to America?

Mr. Crookshank: No, Sir, not that I know of, but we are to have a day on a large aspect of foreign affairs—namely, the Middle East—on Monday.

Mr. Hector Hughes: Returning to the question of the Teachers' (Superannuation) Bill, as the right hon. Gentleman bases his objection to the reasonable request of my right hon. Friend the Member for East Stirlingshire (Mr. Woodburn) on the fact that it would be inconvenient to divide this Bill into two parts, may I ask whether the right hon. Gentleman the Leader of the House does not realise that the Bill is already divided into two parts and, therefore, could reasonably be taken in two separate Committees?

Mr. Paget: Could the right hon. Gentleman consider our sitting for an additional hour on Monday? As he has observed, the debate covers a very wide subject and it is one on which many hon. Members will want to speak—many more than will have the opportunity of catching your eye, Mr. Speaker.

Mr. Crookshank: I have not had any request for that. If there were an official request no doubt we would consider it.

Mr. H. Morrison: I gather that a considerable number of hon. Members would like to speak in that debate and I think that the request made by my hon. and learned Friend the Member for Northampton (Mr. Paget) is, in the circumstances, not unreasonable and that we should have an extra hour on Monday for this debate, if that is acceptable to the Government.

Mr. Crookshank: May I consider that and take note of what the right hon. Gentleman has said? I never like to give a snap answer to a question like that.

Mr. S. Silverman: Can the Leader of the House yet say on what day the debate on capital punishment, promised by the Prime Minister, is to take place and what form that debate will take?

Mr. Crookshank: No. Sir, I cannot go any further than what the Prime Minister said on 24th November.

Mr. Warbey: May I reinforce the request put forward by my hon. Friend for East Ham, North (Mr. Daines) for a general debate on foreign affairs before the Recess? We have the whole vast range of matters covered by the Geneva Conference, about which we have had no debate whatever, and we really should have a debate before the Recess.

Mr. Lewis: With reference to the statement about the long Christmas Recess, in view of the fact that last week, and again this week, the Leader of the House has had to refuse a number of legitimate requests by my hon. Friends for debates on very important subjects, could the right hon. Gentleman arrange for the House to reassemble one week earlier after Christmas and to have debates on the Adjournment on those various matters and on various Private Members' Motions which are on the Order Paper? Everyone would welcome the opportunity to come back a week earlier.

Hon. Members: Answer.

Mr. Speaker: There is bound to be a Motion to that effect, when the matter can be discussed.

Mr. Crookshank: I would only say, in reply to the hon. Member for West Ham, North (Mr. Lewis), that the Recess proposed for this Christmas is exactly the same number of days as that proposed for last Christmas.

Mr. Lewis: It is still too long.

FORMER LEADER OF THE OPPOSITION (TRIBUTES)

The Prime Minister (Sir Anthony Eden): May I ask your leave, Mr. Speaker, and that of the House, to say a few words about the personal regret which hon. Members in all parts of the House sincerely feel at the departure from our midst of the right hon. Gentleman who was recently Leader of the Opposition? These are occasions when personal friendships far transcend political differences and the right hon. Gentleman, in the thirty-three years in which he sat in this House, certainly never made a personal enemy. I know that many sincere attachments and respect for his gifts were made and felt by hon. and right hon. Friends of mine on this side of the House.
Thirty-three years is a rather long span in the life of anybody. In that period the right hon. Gentleman was sometimes on these benches and sometimes on the benches opposite, sometimes with many companions and sometimes with few. That is the lot of political life which we all endure, but however that fell out he was a good House of Commons man and his translation to another place can never really change that.
There are only one or two other sentences I should like to add. If I may say so in the presence of my right hon. Friend the Member for Woodford (Sir W. Churchill), they are about the war years under the guidance of my right hon. Friend in the War Cabinet. For nearly five years I sat with the right hon. Gentleman in the Cabinet and those times were more often stern than smooth. This is not a day for obituary, but there are three qualities of the right hon. Gentleman which come to my mind from those years—his courage, his patience and his tenacity. We would like to feel that in another place health will be given him for many years to come to continue to serve his party and the nation.

Mr. Clement Davies: I am very grateful for the opportunity of adding my tribute to one whom I have had the honour of knowing for more than a quarter of a century and, if I may say so, of knowing as a friend.
Mr. Attlee was not ambitious. Events, combined with a high sense of duty and sterling character, called on him to fill in succession posts of increasing responsibility which he so honourably and successfully undertook. Events called him from a comfortable home and the Bar of England to live and work in the East End, enter local councils and become a mayor of Stepney. Events led him to this House and to office in the first two Labour Governments. Differences in his party and the Election of 1931 led him first to be deputy-leader and then leader of his party.
We remember well his tenacity, his courage—his quiet, steady courage—night after night as he battled during that period from 1931 onwards for the cause in which he so sincerely believed. Then came the war, and his partnership with the right hon. Gentleman the Member for Woodford (Sir W. Churchill), when his loyalty, his devotion to duty, his wisdom and his sound judgment won and commanded the respect of all. With the right hon. Gentleman the Member for Woodford, he made history.
Nineteen forty-five brought him to the position of First Minister. History again will record his great work in the establishment of the welfare society in this country. His name will ever be associated with the freedom and independence of India, Pakistan, Ceylon, and Burma.
Men are complex in their natures. Each of us has many facets. Clement Attlee has many qualities. Had I to choose the outstanding quality which we all recognise to be his. I should say it is integrity—integrity coupled with great modesty and a complete, unselfish, unremitting devotion to duty. He never sought power. He sought rather to serve his fellow men and found ample opportunities for that service, which he readily undertook. For that service, all can and should be grateful, and all will be grateful.
To Mrs. Attlee, who has stood so courageously alongside him in sickness and in health, through all the vicissitudes of a political life, who won all hearts by her charm and sweetness, we extend our

warm and sincere greetings. To both of them we wish many years of joy, happiness and good health.

Mr. Herbert Morrison: On behalf of Members who sit on this side of the House, I should like, first, to thank the Prime Minister and the Leader of the Liberal Party for the kind things they have said about Mr. Attlee, who has now left this House. It was nice of them to do so and we much appreciate it. These are occasions when the House of Commons can rise above partisan and party political considerations and talk about men as we knew them on a man-to-man basis.
It is true, as the right hon. and learned Gentleman the Member for Montgomery (Mr. C. Davies) has said, that Mr. Attlee began his life in social work in Limehouse—a famous and good liberal name. He graduated into local government in the Metropolitan Borough of Stepney and became quite an authority on electricity. In due course he came to Parliament, and I think everybody will agree that he mastered the business of the House of Commons and became essentially a Parliamentarian. Perhaps one of his greatest capacities was to make a speech which covered the subject with extraordinary brevity—with greater brevity almost than anybody else—and yet not much was left out.
I know from my personal contacts with him, as my hon. Friends will agree, that Mr. Attlee loved the House of Commons. Whether Members agreed with the speech he made on the 14-day rule last week or whether they disagreed with it, I think they would all agree that the motive of that speech was the motive of protecting the House of Commons in a way which he thought was right and other people may have thought was wrong.
He was a Prime Minister of a type who was quiet and persuasive, an excellent chairman, giving to the Departmental Ministers their heads. He had a great belief in the delegation of duties to various Ministers, even at the cost of his own work as Prime Minister. That was a very great quality. The system of Cabinet committee organisation in the Governments of 1945 to 1951 was largely creditable to himself.
Mr. Attlee has now gone to another place and we must gradually get used to referring to him by a somewhat different


name. We hope that he will have a happy time there. So far as we of the official Opposition are concerned, we owe him an especial debt for the services he has rendered to us over that long period of twenty years as leader and a number of years before that. I think the House will agree, also, that he not only served his party, but served his country and the world, too, to the best of his ability.
It would be the sincere desire of all the House that both he and Mrs. Attlee, whom we knew well, will enjoy health and happiness in the years to come. They may both be sure that we shall remember with respect and pride the association of all of us, in all quarters of the House, with a mart who served Parliament with great distinction and ability.

Hon. Members: Hear, hear.

Orders of the Day — FINANCE BILL

As amended, considered.

Mr. Speaker: The proposed new Clause—(Relief from profits tax where profits are paid to employees.)—is out of order. The first Amendment selected is that in page 2, line 25.

Clause 2.—(RATES OF PROFITS TAX, ETC.)

3.55 p.m.

Mr. Roy Jenkins: I beg to move, in page 2, line 25, at the end, to insert:
Provided that this subsection shall not apply in the case of any company whose profits in any relevant chargeable accounting period are less than ten thousand pounds.
I am slowly gathering experience in the difficult art of moving comparatively minor Amendments just after half-past three in the afternoon. I am sorry that this one is not rather longer so that I could take a little more time reading it out while hon. Members were settling themselves down.

Mr. James Callaghan: We cannot hear my hon. Friend. Let him read it again.

Mr. Jenkins: I do not propose to take advantage of my hon. Friend's suggestion that I should read it again.
This is a fairly simple and straightforward Amendment which is designed, like a whole series of Amendments which on previous Finance Bills we have moved from this side of the House or of the Committee, to try to get relief, at times in relation to investment allowance, at times in relation to initial allowances, and at times, such as this afternoon, in relation to the Profits Tax upon small businesses. The purpose of the Amendment, therefore, should commend itself not only to hon. Members on this side of the House, but to hon. Members on the Government side also.
At present, I understand, businesses, whether public or private companies, are exempt from Profits Tax up to £.5,000, provided that their profits do not exceed that figure. What we seek to do by the Amendment is to extend this provision to the sum of £10,000 so far as the new Profits Tax imposition is concerned. To this extent, what we seek to do is in


line with the whole series of Amendments which we have moved in the past. Their purpose was to give a certain amount of preferential treatment to small—indeed, to the very small—businesses so far as the operation of the Profits Tax is concerned.
It is true that the Amendment does not single out and attempt to define small or family businesses, or whatever other term one might apply. The Chancellor would agree that it would be impossible to think of an effective definition which could be put into a Finance Bill. The way in which we seek to accomplish our purpose, therefore, is by putting forward a concession which will apply equally to all businesses but which, in the case of businesses other than very small businesses, would be of such negligible importance as to be hardly a concession at all, but which, in the case of the very small businesses, would be a concession worth having.
Why do we seek to do this in general and why, in particular, do we seek to do it at the present time? In general, the argument is that while my hon. and right hon. Friends on this side of the House take the view that the deleterious effects of a high burden of direct taxation, whether in the form of Income Tax or of Profits Tax, upon the health of businesses can be greatly exaggerated, there may be a case for saying that the present rate of taxation falls particularly heavily on small businesses which are endeavouring to build themselves up, as many small businesses have done in the past, into successful and big businesses. If, therefore, we can give them a little assistance, consistent with our general policy that there should be a fair burden of tax upon company profits, a good deal can be said for doing this.
4.0 p.m.
The Chancellor of the Exchequer knows the general case which we have argued and discussed with him in previous years. Why is there, perhaps, a rather special case at present? The point here is an obvious one. Most hon. Members would agree that the credit squeeze, whatever its virtues and its vices, falls more heavily upon small businesses than on large businesses. There is no doubt at all that large businesses have, on the whole, more liquid funds of their own

available. There is no doubt, either, that they have a far greater range of opportunity of raising money from outside sources.
Moreover, I think there is very little doubt that banks, trying to carry out the Chancellor's policy—having to carry out the Chancellor's policy to some extent—prefer, if they have to make a choice, to offend their smaller customers rather than to offend their big customers. I am not blaming anyone for that, for if there is a policy of credit restriction and high interest rates it is inevitably the case that the small businesses suffer more under it than do the big businesses.
One likely result of this policy of restricted credit, if operated over a substantial period, will be the discouragement of the family businesses, and the encouragement of the trend, which there is in this country as, indeed, there is in other countries in an advanced economic state, towards an increasing concentration of activity among a comparatively few firms. There are disadvantages in such a development. I am sure that many hon. Members on the other side of the House, who so often talk about the great virtues of the family business, will recognise that, and I think that to some extent the Chancellor himself recognises it. The small businesses, many of which are playing an effective part in the general productive effort and in the export drive, are feeling the effects of the credit squeeze. My hon. Friend the Member for Wednesbury (Mr. S. N. Evans) has drawn attention to this on several occasions in the House.
There is no doubt that there is a real problem here, and what we are seeking to do in a small way is to offer some relief to small businesses, the least able to bear the present burden of taxation, which may in general be necessary, but which, combined with the credit squeeze, high interest rates and a restrictive attitude on the part of the banks, may do grave harm, and may, if continued for a long time, affect the future development and shape of our whole economy. This is a simple, straightforward Amendment. I do not wish, therefore, to make a long speech about it, and I conclude with the hope that the Chancellor will consider it very sympathetically.

Mr. Eric Fletcher: I beg to second the Amendment.
My hon. Friend the Member for Stechford (Mr. Roy Jenkins) has moved the Amendment very ably, and I very much hope that the Chancellor will give it sympathetic consideration and approval. It is not, I think the Chancellor will agree, an Amendment which would cost the Treasury a great deal of money, and his acceptance of it would be in line with his general policy of encouraging small and deserving businesses and helping them in the difficulties that confront them. It does not seem to me that the Chancellor's acceptance of the Amendment would militate against his desire to fortify the Revenue by some additional income from the Profits Tax.
There is, as my hon. Friend has said, a great deal of difference between a large firm earning a substantial amount of profits year by year and a small, struggling company. It may be that the large company will be able to afford this additional burden of Profits Tax without any difficulty or embarrassment. Indeed, the comments in the financial Press after the Budget indicated that that would be so. The increased rates of taxation were considerably less than the City had expected, and large companies will not suffer any distress as a result. The small company, however, the struggling company whose profits are about £10,000 a year, will be acutely hit even by this increase in the Profits Tax.
We feel that the Chancellor would wish to show his sympathy with the small companies. It is his desire, we understand, that industry and risk undertakings should be as widely spread throughout the community as possible. It is obviously undesirable for our economy that industry should be concentrated in a few hands. It is desirable that small companies should be encouraged. They already have difficulties enough in these days of increasing competition, and in these days when is it so much easier for the larger companies to spend sums in advertising and in other ways which increase the advantages which are inherent in their very size. We think it is unfair that the advantage of the large companies should be exaggerated, and we believe that the Chancellor by this Amendment has an opportunity of evening out the inequalities.
I do not think the cost to the Revenue of this Amendment could be very great.

The small companies undoubtedly are much harder hit, as the experience of all of us shows, in obtaining credit facilities from their banks than are the larger companies. Moreover, the Chancellor, as he himself observed in his Budget speech, by increasing the rate of Profits Tax on distributed income, as compared with undistributed income, is flying in the face of the Royal Commission on the Taxation of Profits and Income and is taking a step which is inherently bad and contrary to the recommendations of the Royal Commission. We hope that next year we shall hear more about the general recommendations of the Royal Commission.
We urge the right hon. Gentleman, in considering this Amendment, to bear in mind that by accepting it he will be doing something to alleviate the problem which affects the small companies, and to that extent will be in accord with the general and very authoritative principles of taxation laid down by the Royal Commission.

Mr. Donald Chapman: I hope very much that there will be a sympathetic response from the other side of the House to this Amendment. Before coming into the Chamber I had a look at what some hon. and right hon. Gentlemen opposite said on this subject when we debated it in 1951 and 1952. At that time the Excess Profits Levy had been started and Profits Tax had been altered. The present Minister of Supply, who was then a junior Minister, gave his blessing to a proposal precisely of the sort of this Amendment. He was talking at a time when Profits Tax was increased. It has just now been increased. He said:
I should say, as I said on the previous occasion, that that is the time to give the small company greater concessions. The heavier the weight of tax the greater the need to give concessions or special help where special help is needed."—[OFFICIAL REPORT, 18th June, 1952; Vol. 502, c. 1214.]
The circumstances he instanced are similar to the circumstances now, and the same argument applies now. I shall be sorry if hon. Members opposite are silent in the debate on this Amendment.
There have been some investigations recently which show how hard the credit squeeze is affecting the small businesses. Investigations have been made by one of our national newspapers. I can give an


example, quoted in August this year, in an investigation carried out by the Daily Express. There was, as the Daily Express found, a small firm in Cheshire. A young man had taken over a business making sports goods and had built it up until he now gave jobs to about 20 other people. Whether he would come within the tax ranges of the Clause, I do not know, but he is the kind of person we have in mind. When the firm needed more money to expand and enter the export market, which I am sure is happening on quite a scale throughout industry, he raised the money by mortgaging his house. Then he obtained his first order, for £800, with more to come.
He now writes:
This has been executed but, unfortunately, I will not be paid for three months. I have a promise of larger orders in future and the prospect of substantial orders from another source abroad. But I cannot afford to finance them, so I approached by bank manager. But the bank replied: 'No further credit can be granted in any circumstances.'
That is precisely the complaint we on this side of the House make, and I hope that the Amendment will help to alleviate it. Our complaint is that the credit squeeze as applied today can do great harm where that harm should not be done.
The Amendment can help precisely that kind of case. If these people can have relief from the extra impositions this year, it will help them in the problem which they are all facing vis-à-vis the bank manager who has to apply the Government's policy for them.
There is also the case of the agricultural industry generally. That industry has notoriously been in difficulties about credit in the past. It has been the victim of the credit squeeze this year. We have found from investigation that a number of farmers are falling into difficulties because of the demands being made upon them to repay their capital liabilities to the bank and cancel their overdrafts. They, in particular, would also be helped by this small Amendment.

Captain J. A. L. Duncan: Can the hon. Member give any instances?

Mr. Chapman: I could not give one precisely, but the hon. and gallant Member could look up the series of cases which

were quoted in the Daily Express. I know that there were examples from the farming industry. One was that of a lady who had taken out a mortgage of £25,000 on her farm and had reduced it to £17,000, but she was now in acute difficulty because the bank demanded immediate cancellation of a further proportion of that £17,000. The case was given in detail in the Daily Express.

Mr. Speaker: I may be wrong, but I believe that the Amendment refers to companies more than to individuals.

Mr. Chapman: I do not know how many of these examples are companies. I know that a number of farms are companies nowadays and I am quite sure that many of them would come precisely within the scope of our discussion.
The Amendment will help firms of the kind that I have been describing. The help is particularly needed because of the way in which the bigger firms are not hit by the credit squeeze at present. Here is a young man, starting a sports goods manufacturing industry, obtaining orders, showing ability, anxious to get on, and anxious to help our export trade and yet being denied credit facilities.
Let us, on the other hand, consider the brewing industry and how it is circumventing the credit squeeze. The annual report of Mitchells and Butlers Limited, the brewers in the Birmingham area, appears in The Times today. That company is far from feeling the effects of the credit squeeze in the way the small companies are feeling it. Indeed, it is not mentioned in the whole of the company's report. The report states:
With the ending of building licences about a year ago we have been able to go forward on a large scale with overtaking arrears in the programme of repairs and improvements to the company's properties. We have applied £75,000 to this purpose from the repairs equalisation reserve which stockholders will remember was set up specifically for this purpose.
Later, the report goes on to state that the capital expenditure which will be completed by 1957 by this brewery alone will total no less than £500,000.
4.15 p.m.
Here is precisely the case for the Amendment. Here is a large company, doing work which is useless to our export drive and our social requirements, able to spend £500,000 in the next two years


in expanding and improving public houses whilst, on the other hand, there is a small firm of the kind which I quoted in acute difficulties in trying to remain in existence and contribute to our export drive because the Government's credit squeeze is now calling in overdrafts. This is going on all over the country as the Daily Express investigation shows.

Mr. E. Partridge: If it is in the Daily Express it is not to be believed.

Mr. Chapman: That is an interesting statement, especially as the Daily Express has given support to the other side of the House on many occasions, but the hon. Member should not blame the Daily Express in this case. The paper is not quoting cases which it has made up, but the names and addresses of people who have sent in reports of their own misfortunes as a result of the credit squeeze. These are Daily Express readers who have sent in accounts of their experiences, which the paper has published.
The credit squeeze does not hurt the big businesses which I have described, but the small businesses. It hurts them substantially. We on this side of the House believe that the Amendment, proposing a small relief costing not more than £500,000, would be of substantial help to a number of those who are getting into acute difficulty.

Mr. John Mackie: I hope that the hon. Member for Northfield (Mr. Chapman) will not interpret my few remarks as possible forthcoming support for him and his colleagues if and when they take the Amendment to a Division. In saying what he did about the effect of the credit squeeze on the small man—and I appreciate Mr. Speaker's intervention to the effect that the Amendment may be referring specifically to companies—the hon. Member raised a point of substance. I am not a reader of the Daily Express and, therefore, I cannot enter the list about the alleged facts and figures given in that journal concerning the difficulties in which farmers and farming companies have found themselves. But I think that the credit squeeze may not have been applied quite in the way that the Chancellor and those associated with him in the Treasury first intended.
I believe that, originally, it was intended to secure a global reduction and

I am sure that the Chancellor intended that everybody, large and small, big capitalist or small capitalist, should all contribute their share towards a reduction. We must all sympathise with the difficulties of the banks and their managers in trying to secure the kind of reduction which the Chancellor intended. It may well be that the banks, in trying to carry out the Chancellor's desires, have had to get the money where they could and apply the squeeze where they thought the money would be forthcoming.
It may be that not only small men but big men have suffered from the desire of the banks to get the money where they could in order to conform with the Chancellor's very proper suggestion that there should be a reduction of credit and a general restraint of over-spending, particularly where it did not seem to take place in productive channels.
I shall certainly not support the Opposition in the Division Lobby if, for political reasons, they seek to divide the House. The hon. Member for Northfield described the Amendment as small, but it deals with a point which those who have suffered in this direction in the country as a whole will be very glad to know has been raised. I feel sure that the Chancellor, or whoever is to reply to the debate, will give it sympathetic consideration, and assure the House that the intention behind the policy of credit restriction is not that there should be any unfairness, but that all, great and small, large companies or small ones, or even private individuals, should contribute their fair share.
There should be no attempt to penalise some people because, in other cases, the banks may be so heavily involved. A few years ago, before the present tightening up took place, the manager of the National Bank of Scotland admitted to me that there were some cases in which the bank was so heavily involved that it was obliged to go on giving credit and could not get anything back. That is not the kind of thing which any of us wish to see, and I think that the moving of this small Amendment gives an opportunity to the Chancellor to say clearly what is the general intention behind the credit squeeze at the present time.

Mr. Austen Albu: I must apologise for not being present when my


hon. Friend the Member for Stechford (Mr. Roy Jenkins) moved the Amendment, to which I also have attached my name, but the reason, which I think is relevant to the debate, is that, as a member of the Parliamentary and Scientific Committee, I had been to see the electronic machine which is now being developed by Messrs. Lyons. This is an example of research and development which is extremely valuable, but which can be done only by a very large company. The arguments that I want to bring in support of this Amendment are not only the financial ones about the credit squeeze, and so forth, which have been so well developed on both sides of the House, but a point in connection with technical research and development.
We tend to think that all these new ideas, particularly in the field of electronics, are suitable for development only by companies with very large resources—companies which are able to raise very large capital sums in the market, or which have very large resources with which to undertake this development. This may be so in many cases; certainly, it is so in the field of nuclear energy, and in the case of the large-scale computer development which is being carried on by Messrs. Lyons and other firms. But it is by no means the case that all new technical developments are suitable only for development by companies with very large resources.
I think it is well known in this House that I am no friend of the small business, merely as a small business, and certainly not a friend of the family business, but I am extremely interested in making it possible for a man with a good new technical idea to be able to develop it and bring it to the point of production, even though he may not have at his back very large financial resources. It is undoubtedly the case, and I know a number of examples, that a man with few financial resources, who happens to be himself a scientist or well-qualified engineer, with a group of other engineers and technicians and a few skilled men, can develop a new type of equipment, employing some new scientific developments almost on a shoestring, but the shoestring must have reasonable width and strength.
What we are worried about in this type of case is that when it comes to getting the product on to the market and sold, the amount of the financial resources which a company of this sort has at its disposal will be insufficient, taking into account the present level of taxation and the credit squeeze. I have always held the view that it should be open to any man who has the capacity to develop something of this sort to be able to do it. I am very much against inherited wealth, and that is why I am against the family business, but I am very much in favour of helping any business which will supply something that is economically advantageous to the community; and many of these developments in the scientific field are extremely valuable as exports.
I know a number of examples of this type of application of electronics. In one case it was applied to printing machinery and developed by a very small firm. I know another example of a very small firm developing something in the field of what is called supersonics—very high frequency vibrations, which are generally produced electrically but in the case I am thinking about can be produced mechanically. These have application in a number of fields and can be used for machining purposes and chemical engineering in the production of emulsions, and other fields of this sort.
These appliances are quite capable of development by a handful of well-qualified men, scientists, engineers, technicians and skilled men in very small numbers, and they produce goods—of a type which the Government are trying to encourage at present—of a very high conversion ratio, and in which what has gone into the work is more brain than anything else. If these ideas are really novel—globally novel, in that they are not only novel in this country but in the markets abroad—they do provide an extremely valuable export of a most important type, and they themselves give rise to employment in this country in industries which are themselves scientific, because these firms do not as a rule make their own components, but buy them from somebody else in industries of a type which we want to encourage.
I am worried lest that type of development may be made almost impossible in future. It is not that I believe that the technical and industrial future of this


country lies in the small firms, because, of course, it does not, as we all know, because the large firms with large credit resources and collective research and development are far more likely to produce large-scale results than the smaller firms. Nevertheless, there are small firms in this field, and I see sitting in front of me an hon. Friend of mine who has his own small company which, I know, has certainly used in its own business many of these new scientific and technical developments.
I am certain that some of these developments which firms are now applying are produced by a few men working on a small scale in their own field, and we ought to do what we can, without encouraging the transmission of wealth or nepotism, which I am entirely against, to give encouragement to men who are prepared to try to conduct research in their own businesses, and encourage them to get their projects to the stage of economic production, and, incidentally, also of economic sale, because the introduction of these projects into the markets of the world can sometimes be very expensive.
It is for that reason that we have submitted this Amendment. I am fully aware that the actual form of the Amendment may not be acceptable, and if it is not we should accept any alteration which the Government may like to make at any stage. I think that perhaps my hon. Friend the Member for Northfield has underestimated the cost. I think that it is probably quite substantial but, after all, not very substantial, probably in relation to the enormous sums which have been passed into and out of the Revenue during this year. I hope that the Government will give consideration, if not to the exact terms of the Amendment, to the suggestion behind it.

4.30 p.m.

Mr. Victor Collins: The Chancellor will be aware that, through the federation to which I belong, I am in contact with many of the small firms which this Amendment is designed to help, so anything I say in support of the Amendment will be derived from actual experience and knowledge of the people concerned.
There is one aspect of the matter which has not yet been mentioned, and it is that it is extremely difficult, even though no dividends at all are paid in a small

business, to finance any really considerable rate of expansion at the present time. The reasons are twofold. First, in the main we have increasing costs which, even if the level of business remains exactly the same, need a higher degree of finance in order merely to hold the necessary stocks and to do the same volume of business. Secondly, immediately one begins to expand and gets more orders, they have to be financed, and the total of sundry debtors increases.
I could mention a number of firms who have discussed their difficulties and problems with me, normally the family business, the small limited company. They have said to me that they would not expand. This was not because they did not desire to get more profits but because the worry of being constantly short of capital, especially now when the bank manager worries them in addition, makes it not worth their while when they are already carrying on satisfactorily.
I feel sure that the Chancellor will say that many of these arguments apply to businesses of all sizes, but they apply particularly to a number of small businesses which cannot go on to the market for capital. In spite of the fact that we are talking about small businesses, this matter affects exports. As president of a trade federation, I have endeavoured on occasions to organise exports and to interest firms to undertake collective exports, by disseminating information on the types of goods which could be exported.
Only last week I was visited here by the partner in an American merchant banking corporation. The Chancellor will be aware of the system on which they work and of the tremendous help they are prepared to give to exports. This man pointed out to me that the import into America which he desired to encourage is at present only 1 per cent. of the total consumption of that product in America. He had just returned from Sweden where he had interested a number of small firms in working together to produce this product and they were expecting to make a total export of £1 million to the United States. That is not negligible. He asked me if a similar export from this country would be practicable in the industry with which I am concerned. He discussed finance and the help that would be given. I said that I would endeavour to do what


I could to interest firms, but that the mere problem of having money owing for three months in making the goods and building up the exports was one with which small firms would not be able to cope and that, therefore, they would be disinclined to embark on such a venture.
Now £1 million from a small industry may not sound very much when our exports must reach hundreds of millions of pounds every month, but if what applies to one small industry can apply to many more, the resulting total would make a considerable contribution to our exports. Therefore, I ask the Chancellor to consider seriously this Amendment and, in any case, to let us know what would be the cost of this proposal to the Exchequer. If the Government cannot accept the Amendment, perhaps they would suggest some acceptable modification, or the right hon. Gentleman would give an indication of whether they will consider something along these lines in future.

The Economic Secretary to the Treasury (Sir Edward Boyle): It is worth pointing out at once that this Amendment deals solely with the rate of distributed Profits Tax and, therefore, it could not affect the company which paid no dividends, to which the hon. Gentleman the Member for Shoreditch and Finsbury (Mr. Collins) referred.

Mr. Collins: I only mentioned that to show how difficult it was, even for a company which did not distribute dividends, to finance an expanding business.

Sir E. Boyle: I realised that and I was going on to say that in this debate hon. Members on both sides of the House have drawn attention to the general problem affecting small businesses today. I make no complaint about that, but it was worth while reminding the Committee at the outset of the scope of this Amendment.
The hon. Member for Stechford (Mr. Roy Jenkins), in his interesting speech, referred to the importance of small businesses having sufficient liquid resources at their disposal so that they could grow into big businesses. The hon. Gentleman the Member for Edmonton (Mr. Albu), whose realistic and unsentimental attitude to small businesses I respect, and to a large extent share, emphasised the importance

of research and I am entirely with him on that point.
I have no quarrel with what was said about small businesses and their liquid resources. Indeed, as I think the right hon. Gentleman the Member for Battersea, North (Mr. Jay) will agree, it was largely on those grounds that I defended the reduction in the standard rate of Income Tax earlier this year. I could not help feeling that the hon. Member for Stechford this afternoon contradicted to some extent the argument he adduced just over a week ago in saying that we should have had an increase in undistributed Profits Tax as well. If he looks back at his speech of last Tuesday week the hon. Gentleman will see a certain difference in tone between that speech and the one he made this afternoon.
A number of hon. Members have talked about the credit squeeze. It would not be in order for me this afternoon to talk about it at any length on this Amendment except to say that just before the Summer Recess I replied to a debate on this subject initiated by the hon. Gentleman the Member for Wednesbury (Mr. S. N. Evans). I have not much to add to what I said on that occasion about small businesses, but hon. Members this afternoon seem to be suggesting that we should try to some extent to neutralise the effects of the credit squeeze by certain differential tax reliefs.
Hon. Members ought to think hard before advocating that, because there is an influential school of thought in this country—for example, the views of Professor Hicks—which says that it is no good thinking that the monetary weapon can do the whole job for us without the use of the budgetary weapon as well. It will be difficult for us to get on top of inflation if we make tax concessions which tend to neutralise the effect of the credit weapon.

Mr. Chapman: If the credit squeeze is acting contrary to our interests in exports it is important that we should bring in some contrary weapon.

Sir E. Boyle: In July, my right hon. Friend made plain the importance he attaches to exports, as the hon. Member for Northfield (Mr. Chapman) will remember. The hon. Gentleman talks about building licensing, which is outside


the scope of this Amendment, but if he likes to send me any evidence he has, I will look at it, because I know how strongly he feels on that subject.
This Amendment covers a relatively narrow point in that it proposes that the increase from 22½ per cent. to 27½ per cent. in the rate of Profits Tax on distributed profits shall not apply where the profits of a company for a chargeable accounting period are less than £10,000. As the hon. Gentleman referred to that point, the actual figure would be £1¼ million in a full year.
The reason I must give to the House for rejecting this Amendment is a simple one, namely, that in considering this Amendment the House must look at it in the context of the Budget as a whole. In his Budget speech my right hon. Friend explained that in his view it was right and appropriate that
… profits should make some contribution to the effort of restraint which is required of all sections of the community.
Accordingly, he decided that
… in present circumstances, when increased dividends may imply increased consumption,"—
I would emphasise that sentence—
there must be an increased tax on the profits which companies distribute.
That is really the main point.
As I have explained to the House many times during the course of these debates, one of the prime objects of my right hon. Friend's Budget is to moderate consumption. It is my right hon. Friend's very understandable view that increased dividends have exactly the opposite effect and my right hon. Friend does not think that he would be justified in going against his policy to the extent of accepting the Amendment. That does not mean that we do not take serious notice of the points raised about small businesses. I am glad hon. Members have raised a number of points, and it is exactly because we realise the need of small businesses and realise the need for flexibility in our industrial structure that my right hon. Friend deliberately did not, in this Budget, increase the undistributed Profits Tax as well.

Mr. Douglas Jay: It is rather surprising that we have had so little support from the benches opposite for this very modest proposal in the interests of small firms. It seems that the

support of the party opposite for private enterprise vanishes when firms below a certain size are being considered. The first "speech" we had from the benches opposite was from my colleague in Battersea, the hon. Member for Battersea, South (Mr. Partridge), who has now left us. He made the statement that the Daily Express is not to be believed. That was taking rather an extreme view. I should not go so far as that and I doubt whether the hon. Member for Southgate (Sir B. Baxter) would go that far. In this instance, the figures quoted from the Daily Express are probably based on fairly good ground.
Apart from that remark, the only speech we had from the Government side of the House came from the hon. Member for Galloway (Mr. Mackie) and he gave full support to our proposals in a most persuasive speech. It is, therefore, surprising, even in this case, when every speech has been in favour of the Amendment, that the Government are again turning it down in a rather peremphory fashion. The Economic Secretary said that the the cost was a discouraging argument from the Government's point of view. It is only £1¼ million out of £38 million which the Government have added to taxation on profits and that did not, therefore, seem a very impressive argument. So far in these debates we have had concessions from the Government—on baskets, for example—only when the Government have been pressed extremely hard by the Opposition, but in the great majority of cases we have had no concessions at all.
The Economic Secretary was not on very good ground in saying that it was inconsistent to put forward this Amendment and in other parts of the debate to argue in favour of taxation on profits generally. We have always been perfectly candid about this. If there is to be any taxation at all, taxation on business profits, particularly on those of the larger and middle-size firms—as experience has shown in this country and the United States—does not do nearly so much economic harm as used to be believed. If there are to be concessions we would favour having them on the personal earned incomes rather than on business profits.
But I do not think that for that reason what was said about the standard rate of


Income Tax was inconsistent with this Amendment. When the general rate of tax is high, the Government should be more discriminating in favour of small firms. There are several reasons, particularly at the present time. The whole difficulty, of course, is that it is much harder for a small firm to expand, to grow and to invest than it is for the larger or even the middle-size firms.
In the first place, its profits are small, particularly at the start. Secondly, there is the difficulty, as everybody will agree, that the really small firm does not have sufficient influence with its bank in getting help from its bank to the extent that the large and established firm would be able to get that help. Thirdly—and I do not believe that this has been mentioned—where the small firm is new, as it very often is—at any rate, most of the new firms are small—it does not have big reserves built up in the past to enable it to expand without borrowing from outside. I have a case in my constituency of precisely such a small firm trying to get into the export markets in the first few years with profits of only a few thousand pounds. It found it extremely hard to raise even small amounts of capital.
4.45 p.m.
Whatever the Economic Secretary says about not blunting the credit squeeze by concessions with what he calls the budgetary weapon, I do not see what good can be done by preventing small firms getting into the export market. Lord Chandos, then Mr. Lyttelton, when he used to attack us from these benches, was very severe on the Labour Government for talking about budgetary weapons. He said that always showed a most hostile and spiteful attitude towards business generally. The Economic Secretary may be getting into trouble there, if he is not careful.
There is another reason why the case for the Amendment is particularly strong at present—on top of the acuteness of the credit squeeze. It is that the tax on distributed profits is being raised. It is not just that we are asking for a new concession for the small firms. We are asking the Chancellor to moderate an increased tax which they are being asked to pay. I agree with the Economic Secretary that as it stands the Amendment

grants a concession only on distributed profits, but that arises from the formulation of the Bill and if he is willing to give a concession to small firms both on undistributed and distributed profits we should be quite happy.
A still further reason is that under this Government the value of money has been falling rapidly and it is not merely the value of wages and the purchasing power of social services that go down as that happens, but, in the case of small firms, if tax rates are left where they are and the value of money goes down, in some ways that means an increase of taxation. There is, therefore, a case on those grounds for the concession.
In general, we on these benches believe in a mixed economy. We believe in some public enterprise and some private enterprise. We are less doctrinaire than hon. Gentlemen opposite. We want to see enterprise of both sorts. I believe—and I think that I speak for most of my hon. Friends—that where there is private ownership in industry there will not be enterprise, unless there is a good deal of competition. One of the most powerful forms of competition is that of the new, growing and expanding firm. Therefore, we think that when there is high taxation on profits and when it is actually being raised, in the interests of competition and of combating monopoly—which the Government is slow to do in the monopoly field as well—there is at least a powerful case for a small concession of this kind.

Mr. B. T. Parkin: I have listened to the debate throughout and I venture to intervene at this late stage because I feel that the Economic Secretary has failed to appreciate some of the implications of the Amendment. Like my hon. Friend the Member for Edmonton (Mr. Albu), I shall not attempt to define what constitutes a small business, but I should like to define the type of business in the defence of which I shall speak for a few moments. It is the type of business which is run by what one might call "working partners." who use the structure of the private company as an accounting convenience to pay themselves as salaries whatever they intend to draw out of the company, and who use the company itself as a sort of savings bank for building up the resources of their business.
It is not therefore only a question of whether certain profits should be distributed or not. We are discussing, within the limits of the Amendment, the type of firms in which people decide whether such profits as are made are declared on paper or not; in other words, whether they seek to use all the devices open to them to spend the surplus available in one way or another in capital expenditure, equipment renewal and advertising on the one hand, or the building up of liquid reserves on the other. That is where the Economic Secretary's reference to what he called the context of his right hon. Friend's Budget overlooked the fact that the tendency in respect of small firms may he exactly opposite to what the right hon. Gentleman intended; to the extent that if this credit squeeze is to be effective, and if we need to combat inflation through the means suggested by the Chancellor of the Exchequer, then the first objective surely, so far as small business firms are concerned, is that they should use less credit.
They are not at the moment entirely precluded from using credit by the fact that the bank manager squeezes them because they, in turn, can to some extent keep their suppliers waiting—as, indeed, their customers keep them waiting—and we have in these circumstances the intervention of the black market financier or an increase in the number of private financial firms interested in discounting bills and granting temporary loans and so on, all of which is much more expensive, adds much more to the cost of the final product—and so may raise the cost of living—than would be the case if the bank, the proper function of which it is, were providing the credit.
I have in mind at the moment the case of the typical small private firm which is informed by its accountants that the preliminary totting up of the figures shows that it is in a favourable position this year. The firm has a meeting of its working partners, who are nominally directors of the firm, and they have to decide whether to increase their own salaries and pay the extra in Income Tax or Surtax, or whether to declare the surplus as a profit to the company, in which case it may be above the figure at which Profits Tax would be paid and into the range where Surtax would be paid, or whether to find sonic ways of spending the money.
There are many ways of spending the money. There are great temptations. They can say, whether they need to do so or not, that they will spend more on advertising because the Chancellor will pay for more than half of it. They will tend to say to one another, and, no doubt, the accountants will say to them, that they are positively foolish not to buy new cars. They may have old cars, but if they do not buy new cars while they have the chance, they will lose this opportunity of having more than half the cost paid by the Chancellor of the Exchequer in the present circumstances.
What they ought to do, of course, is to undertake a self-denying ordinance and say, "We are not going to spend any more on equipment for the moment. We are fully booked up with orders, and we will resist the temptation to buy another factory. We will put this money into liquid reserves, pay our suppliers more quickly, take our discounts and, therefore, be in a position not only to work more efficiently but actually to reduce the profits on our product and contribute something towards the stabilising of the cost of living and the cost of prices and to the anti-inflationary cause which the Chancellor is anxious to initiate."
Unless the Chancellor can offer some concession now, what I am asking is that he should consider most carefully, before his next Budget—if he really wants to put a check on indiscriminate investment and re-equipment through hire-purchase arrangements for machines which people do not really want, but which the Chancellor will help to pay for—at least giving an incentive to small firms not to draw money out and spend it on themselves, but to leave it in the firm, thus enabling them to pay their bills more quickly and so counter the tendency towards extended credit which is the result of the Chancellor's policy at the present time, and which I am sure is quite contrary to what he intended.

Amendment negatived.

Clause 3.—(LLOYD'S AND OTHER UNDERWRITERS.)

Mr. E. Fletcher: I beg to move in page 3, line 2, to leave out "seven" and insert "six."

Mr. Deputy-Speaker (Sir Charles MacAndrew): I think that this Amendment and the Amendment in the name of the right hon. Gentleman the Member


for Leeds, South (Mr. Gaitskell) in the same line, to leave out "fifty" and insert "forty," might be discussed together, with the opportunity for the House to divide on both, if that is desired.

Mr. Fletcher: I am much obliged to you, Sir Charles. I think that it would be for the convenience of the House if we discussed both these Amendments together and if we on this side reserved the right to have a Division on both Amendments.
In a sense the Amendments are related but they raise different arithmetical points. The Chancellor of the Exchequer will remember, as will the Financial Secretary, that we had a very interesting, although, from our point of view, not a very satisfactory debate on this Clause during the Committee stage. One reason these Amendments have been put down is that we were so dissatisfied with the half-hearted, or, shall I say, not very satisfactory explanation, which we had from the Treasury Bench in the Government's attempt to justify Clause 3.
Clause 3, curious as it may seem, is the one Clause in the Bill which gives any kind of concession or relief to any kind of taxpayer. It is somewhat significant and, no doubt, illustrative of Tory Party philosophy, that this concession is given to the very limited, and, I should have thought, already privileged class of Lloyd's underwriters. I have no prejudice against Lloyd's underwriters, but I should have thought that the House, before accepting the Chancellor's proposals, should examine very critically indeed whether, in a Budget which is designed to curb inflation and produce revenue, it is really necessary to grant these very considerable concessions to Lloyd's underwriters, which will have the effect of increasing the very substantial privileges which they already enjoy over all other sections of the community.
As we are aware, the position of a Lloyd's underwriter today is this. If he earns a profit in any given year of £14,000—I take that figure because it is a convenient one and, in view of this Clause, does not seem to me to be inappropriate—instead of being under a liability, like any other individual who makes such a profit, of having to pay Income Tax and Surtax on it, he has the

great advantage of being able to put £5,000, or at any rate £4,900 of it, in a special fund.
I mention those figures because under the existing Act of 1952 he can place in a special reserve fund £5,000, or 35 per cent. of his profit. According to my calculation, which I do not guarantee, 35 per cent. of £14,000 is £4,900 and, therefore, on the illustration which I have taken, he can in round figures place £5,000 into a special reserve fund without any kind of liability, at any rate for the time being, and perhaps for ever, on that amount. Of course he would then reduce the sum for which he is assessable to tax from £14,000 to £9,000.
5.0 p.m.
I fully understand the reasons which induced earlier Chancellors to make the concession. It was for the express purpose of giving some encouragement to Lloyd's underwriters to carry on the business which they have been carrying on for a great many years, and which, by its very nature, debars them from forming public companies. I appreciate that if they were able to form public companies, and have their affairs dealt with and their profits taxed on that basis, they might be able to obtain certain other advantages. However, I do not think anybody would deny that the history of Estate Duty has shown that Lloyd's underwriters—as my hon. Friend the Member for St. Pancras, North (Mr. K. Robinson) pointed out in our earlier debates—are by the very nature of things not particularly hard-working individuals, because the actual hard work is done by others for them, and their function is to accept risks, make profits and from time to time to pay out losses.
The object of the Amendment is, by way of compromise, to give the Government an opportunity to reconsider their proposals. To take the illustration that I have already given, the Government's proposal is that in future a Lloyd's underwriter who makes a profit of £14,000 in a year should be able to place £7,000 into his special reserve and thereby avoid tax liability on £7,000, as distinct from the £5,000 at present.
It seems to me that there might be something to be said for the Clause if we had had any detailed justification for it from the Treasury but we have had none. We have been told, on the one


hand, that certain representations have been made by Lloyd's underwriters, but during the Committee stage we were told that a great many Lloyd's underwriters did not feel particularly enthusiastic about the Clause.
We have been given no figures to indicate what the advantage to the country would be. We have been told that the concession would cost about £500,000, and it has been suggested, in very vague language, by the Financial Secretary that, unless this further concession is made, we shall not be able to get the full benefit of dollar earnings by undertaking insurance business which we should otherwise enjoy. I very much doubt whether, in saying that, justice is being done to Lloyd's underwriters.
I very much doubt whether they will be deterred from undertaking the maximum dollar business and other business if we decline to give them this additional tax privilege. Moreover, we have no reason to suppose that the dollar earnings which will result if the further concession is made are likely to be sufficiently substantial to justify a departure from the ordinary provisions that we are making in the Bill.
I could not understand why the Financial Secretary, who is putting forward this extraordinary Clause, could not give us a figure. He was pressed in Committee to give us a single figure for our net invisible exports from insurance. He declined to give any figure, and the extraordinary reason which he put forward for his failure to give the information was that the figure fluctuated from year to year. As I said to him at the time, if he did not know the figure, how could he tell that it fluctuated? I hope that since then the right hon. Gentleman—we know he is not really as simple as that—will have made further inquiries and will be able to do himself more justice than he did in Committee.
We hoped in Committee, and hope again now, that, if the Government are seriously-minded about giving this further inducement and privilege to Lloyd's underwriters, they will at any rate see the justice of making it conditional upon, and coupling it with, some obligation on the part of underwriters to do a certain amount of dollar insurance business or insurance business outside the country each year in order to qualify for the additional benefit.
The Government resisted that proposal in Committee. It would be wrong for me to refer to that matter further on this Amendment, because it is the subject of a subsequent Amendment which I understand will be called and which I hope will be accepted. Whether or not the Amendment is accepted, I hope that enough has been said on the subject in our debates to convince the Government that, if it is really necessary to give some further inducement to Lloyd's underwriters, justice would be done to them—more than done to them—consistent with the Government's obligations to all other taxpayers, if there were a modest increase in the existing limits from £5,000 to £6,000 and from 35 per cent. to 40 per cent. respectively.
Moreover, if the Amendment were accepted, it would very greatly reduce the extremely complex calculations and accountancy tasks which, as the right hon. Gentleman admitted, will result from the Clause as drafted. He said that it baffled him and could only be sorted out by accountants. The Amendment would reduce that complexity and afford the Government an opportunity to consider the matter afresh.

Mr. Kenneth Robinson: I beg to second the Amendment.
In our discussions on the Clause in Committee, reference was made to the small category of persons for which these concessions are being made. I said that the vast majority of Lloyd's underwriters did little or no work, at any rate in the underwriting field. This provoked one Lloyd's underwriter to send me a somewhat irate letter claiming that he worked very hard indeed, although, apparently, he had sufficient time to read our proceedings in the OFFICIAL REPORT. Of course, it is not true that no Lloyd's underwriter works hard. There are underwriting agents, themselves underwriters, who frequently work quite hard, but I still stand by what I said in Committee, that the vast majority do nothing at all beyond paying large sums into their banking accounts from time to time.
When we discussed the Clause in Committee, hon. Member after hon. Member on this side of the Committee begged the Government to give some figures to support their claim that the concession was justified. We asked for one year's figures


or for three years' figures. All we got from the Financial Secretary was the very vague and unsatisfactory statement that the figures fluctuated. I have an unworthy suspicion that the right hon. Gentleman had some figures, but the trouble with them was that they did not back up his argument, and therefore the only thing to do was to keep them from the Committee.
The right hon. Gentleman has had time, since the Committee stage, to get figures, and to select from them those which will, to some extent, justify the case which he is trying to make. I hope that on this occasion we shall be told something about the benefits which have accrued to the country from foreign or dollar insurance by Lloyd's underwriters, or the insurance industry as a whole, over the past three or five years. I know that the results fluctuate, and that is why I ask for them over a period. In the absence of those figures, we must assume that this business does not represent the admirable invisible export which it is made out to represent by Lloyd's underwriters themselves and by the Government.
I wish to make a further point about the second Amendment. Even were the Government able to convince us that this is a legitimate concession, which so far they have failed to do, I can well understand that, with the general rise in costs since 1952, it might be necessary or desirable to increase the amount of money which an underwriter can place in his special reserve fund. But I can see no justification whatever for increasing the percentage of his profit which he is permitted to place in this special insurance fund. Costs rise, the value of ships and commodities rise, premiums rise, profits rise and so do losses. Why is it necessary to permit these underwriters to put 50 per cent. instead of the existing 35 per cent. into a special reserve fund? If the Government think it necessary, how does that tie up with the hurricane losses, which was one reason put forward by the right hon. Gentleman for including this Clause in an emergency Finance Bill at this time?
I hope that the repeated requests for information from the right hon. Gentleman have not fallen on deaf ears, and that he will be able to convince us that

there are sound reasons for making this extended concession to Lloyd's underwriters.

5.15 p.m.

The Financial Secretary to the Treasury (Mr. Henry Brooke): I assure both the hon. Member for Islington, East (Mr. E. Fletcher) and the hon. Member for St. Pancras, North (Mr. K. Robinson) that the Clause does not baffle me. I hope that I may be able to prove that to the House. I welcome the opportunity, afforded by this Amendment, of speaking further, because I have granted from the beginning that this is a complex matter and I wish to give as much information and explanation as I can.
The hon. Member for Islington, East said that the Clause would cause a loss of revenue of £500,000 a year. He will appreciate, as I pointed out during the Committee stage discussions, that the £500,000 is calculated on the assumption that full use is made of the powers given by the Clause. If, as has been alleged by some hon. Members, the provision will not prove attractive to Lloyd's underwriters, then the figure, instead of being £500,000, will be a very small one, or nothing at all. I would also point out—because £500,000 is a substantial sum—that in any case it will taper off. This is not an exemption from Surtax, it is a deferment of Surtax, and in due course, as underwriters die or go out of business, the Surtax will become payable; so that this is not even £500,000 a year ad infinitum. The amount will dwindle as the Surtax becomes payable.
The hon. Member for Islington, East fell into another error. I hope that he will accept my assurance that I am not casting any blame on him, because this is not an easy matter to follow. The proposed 50 per cent. limit is not actually as much as he thought. He made the calculation that under the existing statutory powers, on an income of £14,000 a year it would be possible to put to reserve about £5,000, being 35 per cent. of £14,000. That is not correct, because the hon. Gentleman overlooked the fact that in the case of Lloyd's underwriters the gross equivalent of the Profits Tax which they pay—by "gross equivalent" I mean after adding back Income Tax at the standard rate—is deducted in computing their total income for Surtax purposes, and also


in computing their profits for the purposes of these limits. So that these percentages are worked out, not on the full profits of an underwriter, but on a figure reached by deducting from the underwriter's profit the gross equivalent of Profits Tax which he has to pay.
The calculation works out rather differently. I have taken £14,500 rather than £14,000 for the purposes of my example. Assuming a gross profit of £14,500, the limit which the underwriter is allowed to put to reserve free of Surtax under the present statutory powers is not £5,000, but £2,364 or thereabouts. If this Clause is accepted, the limit will go up, not to £7,000 in such a case, but to about £3,500. In other words, because of the Profits Tax deduction, the present limit, which is 35 per cent., works out in practice at between 16 per cent. and 20 per cent. of the gross profits: and the new limit of 50 per cent. will work out, roughly, at about 24 per cent. to 29 per cent. of the gross profits.
The hon. Member for St. Pancras, North suggested that there might be a case for raising the global figure but not the percentage. I am not sure whether he appreciates that it is normally the percentage figure which applies, and not the global figure, and that only those whose profits are very large would be cut short by the global figure. The global figure is inserted simply so that there shall be a ceiling if the underwriter's profits are very large in a particular year.
Both hon. Members asked whether I could give some further information in support of this Clause. I may have difficulty in not trespassing on the scope of the next Amendment if I do so, but the whole matter hangs together, and I think it right, when speaking on the first Amendment, to seek to justify it as a whole. I have been considering what further figures I could properly give to the House. The official annual summary, published by the Board of Trade, of statements of assurance business will show that, in 1954, the total premium income of insurance companies and Lloyd's combined amounted to about £1,250 million; that is, the total premium income from all sources. Of that, Lloyd's accounted for about £225 million. That is the order of magnitude of the premium income. In the case of Lloyd's—and, after all, it is Lloyd's that we are now discussing—the proportion of the premium income from

overseas is more than half the total. That shows the size of the proposition.
Hon. Members have asked if I could also give the net earnings from overseas business. I am afraid that I am not in a position to give that information. So far as I know, it was not given by the previous Government, and I really must tell the House that it would not be in the public interest to state how much we are making by way of net profit upon overseas insurance business every year. I say that with a full sense of responsibility and with no desire to hold anything back from the House. I have given those figures of net premium income, which show the size of the problem which we are considering.

Mr. Jay: The right hon. Member gave us the figures of total premium income from overseas, but not the net earnings. Could he at least give us the total premium income from dollar countries?

Mr. Brooke: In the case of Lloyd's, the premium income from dollar sources is very nearly half the total premium income.

Mr. Jay: I only want to get the facts clear. I thought the right hon. Gentleman said that in the case of Lloyd's the total premium income from overseas was half the total premium income from all sources. I asked him how much of the total premium income from overseas is from dollar countries. They may both be half. Is that what he meant?

Mr. Brooke: The right hon. Gentleman is quite right to ask these questions—and I want to make the position clear. In 1954, the total premium income of Lloyds, from all sources, was about £225 million. Nearly half the total in an ordinary year—I cannot say precisely what it was in 1954—is from dollar sources, and well over half is from overseas. I hope that I have made that clear.
The next question is, why should it be necessary or desirable to take extra powers for increasing the reserves? It has been indicated to the House from the start of our debates that this proposal arose out of the heavy losses suffered through the hurricanes of 1954—losses which affected both English and American insurers. That is the origin of the matter, and what we have to consider is whether special action should be


taken to enable Lloyd's underwriters to continue to write these serious risks overseas, because their recent experience has been such as to cause people to wonder whether they can carry these risks unless they are in a position to enlarge their reserves.
As I understand, in these days an increasing amount of dollar business which demands a really massive reserve is coming on to the market. I am referring in particular to what are called excess-of-loss reinsurances for catastrophic risks. As anybody who knows anything about insurance realises, this sort of business may be, and normally is, profitable over a sufficient number of years, but it may take heavy knocks in any one year, and insurers need great financial strength if they are to write that sort of excess-of-loss reinsurance against catastrophe.
If British insurers can offer reinsurance cover upon this type of business they can thereby get the offer of a good deal of much less hazardous reinsurance business and other business. As, again, everybody who has been in insurance knows, if they are not willing to take the less attractive business which may carry considerable risks with it, although it is profitable over a long period, they are not so likely to get the opportunity of taking the bread and butter business which does not carry anything like the same degree of risk.
I must put it to the House that it is desirable that Lloyd's underwriters should not have to stand off from that type of business. As I say, there has been heavy loss, and yet it is clearly in the interests of our balance of payments that we should go on with this business, and not pull out of it.

Mr. Chapman: All through the debates on this Clause we have had statements about the heavy loss which has been incurred. Is the right hon. Gentleman in a position to give any figures, not of the losses of the companies but of the losses which have been underwritten by them? We have never been given that information.

Mr. Brooke: It really would not be right for me to do so. I could not disclose here the losses of Lloyd's or of individual underwriters, but it must be clear to anybody who has studied what

has been happening in the world that substantial losses have been incurred.
The one question which is at issue is whether, by this Clause, we can improve our balance of payments. Speaking generally, we wish British people to go out in the world, everywhere, getting export trade. Similarly, we hope that they will go out getting insurance business. I submit to the House that it will be well worth while to allow this extension of the Surtax-free reserves, in order that this business may be maintained and increased.
There is one other point which I think the House will appreciate. Under the new system laid down in the Bill, where the additions to reserves involve only deferment of Surtax, and not exemption from it, it is no longer quite so important to determine the ceilings or the limits. Both in the 1949 and the 1952 Act a substantially greater advantage was given, in that there was complete exemption from Surtax, and the limit then set a definite ceiling to the amount of Surtax for which exemption could be obtained. In this case, no consideration of that sort enters into the matter. I do not say that the House should not look very carefully at these figures, but in that respect they are less important than the figures which have been under consideration when earlier Bills have been before the House. I hope that both hon. Members who have spoken will appreciate that I have done all I can to give the fullest information upon the matter. With that explanation, I hope that they may be willing to withdraw the Amendment.

Mr. Jay: At least the Financial Secretary has now given us some figures. I do not really know why he could not have given them to us during the Committee stage. That would have avoided a good deal of argument. Nevertheless, I am far from convinced that they make out his case. He has told us that the total premium income from dollar countries overseas is about £100 million. I agree that that is a substantial sum, but that is not really the sum which is at issue in this argument. That is the total premium income. From that, presumably, are to be deducted both the losses of which he spoke—or the claims, or whatever they are called—and, secondly, the expenses of winning that premium income.
What we are concerned with is the net figure. because it is only the net figure which is a positive help to our dollar balance of payments. We do not know without seeing the figures whether in fact, net, it is a positive balance or not. Can the Financial Secretary at least assure us that, after deducting claims and expenses, there is something of the £100 million left, and not a minus quantity?

5.30 p.m.

Mr. Brooke: I can give that assurance to the right hon. Gentleman. My right hon. Friend would not have brought forward this proposal if it were simply a matter of expanding a losing business. It is a profitable business.

Mr. Jay: I am glad to have extracted that amount of information from the hon. Gentleman. He made so much about the losses on the hurricanes that I did not expect that information. Whatever that loss may be, that is not the relevant figure. We are concerned here with how far that can be increased by the tax concession which the Financial Secretary is now proposing and that is an even smaller sum. We are led to the conclusion that the Government hope to achieve some increase which they are not prepared to formulate to the House but which is a good deal less than the £100 million, after making both these deductions.
We are dealing with a tax concession to one particular kind of taxpayer; we

ought to look very narrowly at a special concession for the benefit of one particular group. I am sure that most Lloyd's underwriters work hard, in spite of what has been said in this debate. Nevertheless it has been agreed that, by and large, they are fairly wealthy people. We are being asked to make a considerable concession to them on rather hazy, shady, misty arguments, without very full figures. That is why we complain of the action of the Government, in a Budget which imposes many heavy burdens on ordinary people all over the community.

We are told that the balance of payments position is so serious under the administration of the Chancellor of the Exchequer that we have to put a tax on dustbins, sieves, cinder sifters, and similar things. I have serious doubts whether the Chancellor really believes that the taxes on these household articles will solve the balance of payments position. I am unconvinced, in the absence of stronger arguments, that this is really the time for giving a special concession to one particular class of fairly wealthy Surtax payers. Unless we are to have further figures and more convincing arguments I shall advise my hon. Friends to divide in favour of this Amendment.

Question put, That "seven" stand part of the Bill:—

The House divided: Ayes 244, Noes 190.

Division No. 73.]
AYES
[5.35 p.m.


Agnew, Comdr. P. G.
Braithwaite, Sir Albert (Harrow, W.)
Dodds-Parker, A. D.


Aitken, W. T.
Bromley-Davenport, Lt.-Col. W. H.
Doughty, C. J. A.


Allan, R. A. (Paddington, S.)
Brooke, Rt. Hon. Henry
Drayson, G. B.


Alport, C. J. M.
Brooman-White, R. C.
Duncan, Capt. J. A. L.


Amery, Julian (Preston, N.)
Buchan-Hepburn, Rt. Hon. P. G. T.
Duthie, W. S.


Amory, Rt. Hn. Heathcoat (Tiverton)
Burden, F. F. A.
Elliot, Rt. Hon. W. E.


Anstruther-Gray, Major W. J.
Butcher, Sir Herbert
Emmet, Hon. Mrs. Evelyn


Arbuthnot, John
Butler, Rt. Hn. R. A. (Saffron Walden)
Errington, Sir Eric


Armstrong, C. W.
Campbell, Sir David
Erroll, F. J.


Ashton, H.
Carr, Robert
Farey-Jones, F. W.


Astor, Hon. J. J.
Cary, Sir Robert
Fell, A.


Atkins, H. E.
Channon, H.
Finlay, Graeme


Baldwin, A. E.
Chichester-Clark, R.
Fisher, Nigel


Balniel, Lord
Cole, Norman
Fletcher-Cooke, C.


Barber, Anthony
Cooper, Sqn. Ldr. Albert
Fort, R.


Barlow, Sir John
Cordeaux, Lt.-Col. J. K.
Foster, John


Barter, John
Corfield, Capt. F. V.
Freeth, D. K.


Baxter, Sir Beverley
Craddook, Beresford (Spelthorne)
George, J. C. (Pollok)


Bell, Ronald (Bucks, S.)
Crookshank, Capt. Rt. Hn. H. F. C.
Glover, D.


Bevins, J. R. (Toxteth)
Crosthwaite-Eyre, Col. O. E.
Godber, J. B.


Bidgood, J. C.
Crouch, R. F.
Comme-Duncan, Col. A.


Biggs-Davison, J. A.
Crowder, Sir John (Finchley)
Gough, C. F. H.


Birch, Rt. Hon. Nigel
Crowder, Petre (Ruislip—Northwood)
Gower, H. R.


Bishop, F. P.
Cunningham, Knox
Graham, Sir Fergus


Body, R. F.
Currie, G. B. H.
Green, A.


Boothby, Sir Robert
Dance, J. C. G.
Grimond, J.


Bossom, Sir A. C.
D'Avigdor-Goldsmid, Sir Henry
Grosvenor, Lt.-Col. R. G.


Bowen, E. R. (Cardigan)
Deedes, W. F.
Gurden, Harold


Boyle, Sir Edward
Digby, Simon Wingfield
Hall, John (Wycombe)




Hare, Hon. J. H.
Low, Rt. Hon. A. R. W.
Renton, D. L. M.


Harris, Frederic (Croydon, N.)
Lucas, Sir Jocelyn (Portsmouth, S.)
Robertson, Sir David


Harrison, A. B. C. (Maldon)
Lucas-Tooth, Sir Hugh
Rodgers, John (Sevenoaks)


Harvey, Air Cdre. A. V. (Macclesfd)
McAdden, S. J.
Roper, Sir Harold


Harvey, John (Walthamstow, E.)
Macdonald, Sir Peter
Ropner, col. Sir Leonard


Head, Rt. Hon. A. H.
Mackeson, Brig. Sir Harry
Russell, R. S.


Heald, Rt. Hon. Sir Lionel
Mackie, J. H. (Galloway)
Sharpies, R. C.


Heath, Edward
McLaughlin, Mrs. P.
Simon, J. E. S. (Middlesbrough, W.)


Hicks-Beach, Maj. W. W.
Maclay, Rt. Hon. John
Smyth, Brig. J. G. (Norwood)


Hill, John (S. Norfolk)
Macleod, Rt. Hn. Iain (Enfield, W.)
Soames, Capt. C.


Hirst, Geoffrey
Macmillan, Rt. Hn. Harold (Bromley)
Spearman, A. C. M.


Holland-Martin, C. J.
Macpherson, Niall (Dumfries)
Speir, R. M.


Holt, A. F.
Maddan, Martin
Spens, Rt. Hn. Sir P. (Kens'gt'n, S.


Hope, Lord John
Maitland, Cdr. J.F.W. (Horncastle)
Stanley, Capt. Hon. Richard


Hornsby-Smith, Miss M. P.
Maitland, Hon. Patrick (Lanark)
Stevens, Geoffrey


Horsbrush, Rt. Hon. Dame Florence
Markham, Major Sir Frank
Steward, Sir William (Woolwich, W.)


Howard, Gerald (Cambridgeshire)
Marlowe, A. A. H.
Stewart, Henderson (Fife, E.)


Howard, Hon. Greville (St. Ives)
Marples, A. E.
Stoddart-Scott, Col. M.


Howard, John (Test)
Marshall, Douglas
Storey, S.


Hudson, Sir Austin (Lewisham, N.)
Mathew, R.
Stuart, Rt. Hon. James (Moray)


Hughes Hallet, Vice-Admiral J.
Maude, Angus
Summers, G. S. (Aylesbury)


Hughes-Young, M. H. C.
Mawby, R. L.
Sumner, W. D. M. (Orpington)


Hulbert, Sir Norman
Maydon, Lt.-Comdr. S. L. C.



Hurd, A. R.
Medlicott, Sir Frank
Taylor, William (Bradford. N.)


Hutchison, Sir Ian Clark (E'b'gh, W.)
Monckton, Rt. Hon. Sir Waller
Thomas, Rt. Hon. J. P. L. (Hereford)


Hyde, Montgomery
Moore, Sir Thomas
Thomas, Leslie (Canterbury)


Hylton-Foster, Sir H. B. H.
Morrison, John (Salisbury)
Thomas, P. J. M. (Conway)


Iremonger, T. L.
Nabarro, G. D. N.
Thompson, Kenneth (Walton)


Irvine, Bryant Godman (Rye)
Nairn, D. L. S.
Thompson, Lt.-Cdr. R. (Croydon, S.)


Jennings, J. C. (Burton)
Neave, Airey
Thorneycroft, Rt. Hon. P.


Jennings, Sir Roland (Hallam)
Nicholson, Godfrey (Farnham)
Thornton-Kemsley, C. N.


Johnson, Dr. Donald (Carlisle)
Nicolson, N. (B'n'm'th, E. &amp; Chr'ch)
Touche, Sir Gordon


Johnson, Eric (Blackley)
Nield, Basil (Chester)
Turton, Rt. Hon. R. H.


Jones, A. (Hall Green)
Noble, Comdr. A. H. P.
Vaughan-Morgan, J. K.


Keegan, D.
Oakshott, H. D.
Vickers, Miss J. H.


Kerby, Capt. H. B.
O'Neill, Hn. Phelim (Co. Antrim, N.)
Vosper, D. F.


Kerr, H. W.
Ormsby-Gore, Hon. W. D.
Wade, D. W.


Kershaw, J. A.
Orr, Capt. L. P. S.
Wakefield, Edward (Derbyshire, W.)


Kirk, P. M.
Orr-Ewing, Charles Ian (Hendon, N.)
Wakefield, Sir Waved (St. M'lebone)


Lagden, G. W.
Osborne, C.
Walker-Smith, D. C.


Lambert, Hon. G.
Page, R. G.
Ward, Hon. George (Worcester)


Lambton, Viscount
Panned, N. A. (Kirkdale)
Ward, Dame Irene (Tynemouth)


Lancaster, Col. C. G.
Partridge, E.
Webbe, Sir H.


Leather, E. H. C.
Pilkington, Capt. R. A.
Whitelaw, W.S.I. (Penrith &amp; Border)


Leavey, J. A.
Pitman, I. J.
Williams, Paul (Sunderland, S.)


Leburn, W. G.
Pitt, Miss E. M.
Williams, R. Dudley (Exeter)


Legge-Bourke, Maj. E. A. H.
Pott, H. P.
Wilson, Geoffrey (Truro)


Legh, Hon. Peter (Petersfield)
Powell, J. Enoch
Wood, Hon. R.


Lennox-Boyd, Rt. Hon. A. T.
Price, David (Eastleigh)
Woollam, John Victor


Lindsay, Hon. James (Devon, N.)
Price, Henry (Lewisham, W.)
Yates, William (The Wrekin)


Lindsay, Martin (Sollihull)
Raikes, Sir Victor



Lloyd, Rt. Hon. Selwyn (Wirral)
Ramsden, J. E.
TELLERS FOR THE AYES:


Lloyd-George, Maj. Rt. Hon. G.
Redmayne, M.
Mr. Wills and


Longden, Gilbert
Remnant, Hon. P.
Colonel J. H. Harrison.




NOES


Ainsley, J. W.
Chapman, W. D,
Evans, Edward (Lowestoft)


Albu, A. H.
Chetwynd, G. R.
Evans, Stanley (Wednesbury)


Allen, Scholefield (Crewe)
Clunie, J.
Fernyhough, E.


Bacon, Miss Alice
Coldrick, W.
Fletcher, Eric


Balfour, A.
Collick, P. H. (Birkenhead)
Forman, J. C.


Bartley, P.
Collins, V.J. (Shoreditch &amp; Finsbury)
Fraser, Thomas (Hamilton)


Benn, Hn. Wedgwood (Bristol, S.E.)
Corbet, Mrs. Freda
Gaitskell, Rt. Hon. H. T. N.


Benson, G.
Cove, W. G.
Gibson, C. W.


Beswick, F.
Craddook, George (Bradford, S.)
Gordon Walker, Rt. Hon. P. C.


Bevan, Rt. Hon. A. (Ebbw Vale)
Cronin, J. D.



Blackburn, F.
Crossman, R. H. S.
Greenwood, Anthony


Benkinsop, A.
Cullen, Mrs. A.
Grey, C. F.


Blyton, W. R.
Daines, P.
Griffiths, David (Rother Valley)


Bottomley, Rt. Hon. A. G.
Dalton, Rt. Hon. H.
Griffiths, Rt. Hon. James (Llanelly)


Bowden, H. W. (Leicester, S.W.)
Darling, George (Hillsborough)
Griffiths, William (Exchange)


Boyd, T. C.
Davies, Stephen (Merthyr)
Hale, Leslie


Braddock, Mrs. Elizabeth
Deer, G.
Hall, Rt. Hn. Clenvil (Colne Valley)


Brockway, A. F.
de Freitas, Geoffrey
Hamilton, W. W.


Broughton, Dr. A. D. D.
Delargy, H. J.
Harrison, J. (Nottingham, N.)


Burke, W. A.
Dodds, N. N.
Hastings, S.


Butler, Herbert (Hackney, C.)
Donnelly, D, L.
Healey, Denis


Butler, Mrs. Joyce (Wood Green)
Dugdale, Rt. Hn. John (W. Brmwch)
Henderson, Rt. Hn. A. (R'wl'y Regis)


Callaghan, L. J.
Ede, Rt. Hon. J. C.
Herbison, Miss M.


Carmichael, J.
Edwards, Rt. Hon. John (Brighouse)
Holman, P.


Castle, Mrs. B. A.
Edwards, Rt. Hon. Ness (Caerphilly)
Holmes, Horace


Champion, A. J.
Edwards, W. J. (Stepney)
Hubbard, T. F.




Hughes, Emrys (S. Ayrshire)
Neal, Harold (Bolsover)
Steele, T.


Hughes, Hector (Aberdeen, N.)
Noel-Baker, Francis (Swindon)
Stokes, Rt. Hon. R. R. (Ipswich)


Hunter, A. E.
Oram, A. E.
Strachey, Rt. Hon. J.


Hynd, H. (Accrington)
Orbach, M.
Strauss, Rt. Hon. George (Vauxhall)


Irving, S. (Dartford)
Oswald, T.
Summerskill, Rt. Hon. E.


Jay, Rt. Hon. D. P. T.
Owen, W.J.
Sylvester, G. O.


Jeger, George (Goole)
Padley, W, E.
Taylor, Bernard (Mansfield)


Jeger, Mrs. Lena (Holbn &amp; st.Pncs, S.)
Paling, Will T. (Dewsbury)
Taylor, John (West Lothian)


Jenkins, Roy (Stechford)
Palmer, A. M. F.
Thomas, Iorwerth (Rhondda, W.)


Johnson, James (Rugby)
Panned, Charles (Leeds, W.)
Thomson, George (Dundee, E.)


Jones, Rt. Hn. A. Creech (Wakefield)
Pargiter, G. A,
Tomney, F.


Jones, Elwyn (W. Ham, S.)
Parkin, B. T.
Turner-Samuels, M.


Jones, Jack (Rotherham)
Pearson, A.



Kenyon, C
Peart, T. F.
Ungoed-Thomas, Sir Lynn


Key, Rt. Hon. C. W.
Plummer, Sir Leslie
Viant, S. P.


King, Dr. H. M.
Popplewell, E.
Warbey, W. N.


Lawson, G. M.
Price, J. T. (Westhoughton)
Weitzman, D.


Ledger, R. J.
Price, Philips (Gloucestershire, W.)
Wells, Percy (Faversham)


Lee, Frederick (Newton)
Proctor, W. T.
Wells, William (Walsall, N.)


Lee, Miss Jennie (Cannock)
Rankin, John
West, D. G.


Lever, Harold (Cheetham)
Reeves, J.
Wheeldon, W. E.


Lewis, Arthur
Reid, William
White, Mrs. Eirene (E. Flint)


Lipton, Lt.-Col. M.
Rhodes, H.
White, Henry (Derbyshire, N.E.)


MacColl, J. E.
Robens, Rt. Hon. A.
Wigg, George


McKay, John (Wallsend)
Roberts, Albert (Normanton)
Wilkins, W. A.


McLeavy, Frank
Robinson, Kenneth (St. Pancras, N.)
Willey, Frederick


MacPherson, Malcolm (Stirling)
Rogers, George (Kensington, N.)
Williams, David (Neath)


Mahon, S.
Ross, William
Williams, Rev. Llywelyn (Ab'tillery)


Mallalieu, E. L. (Brigg)
Royle, C.
Williams, W. R. (Openshaw)


Marquand, Rt. Hon. H. A.
Shinwell, Rt. Hon. E.
Williams, W. T. (Barons Court)


Mason, Roy
Silverman, Julius (Aston)
Wills, Eustace (Edinburgh, E.)


Messer, Sir F.
Silverman, Sydney (Nelson)
Wilson, Rt. Hon. Harold (Huyton)


Mikardo, Ian
Simmons, C. J. (Brierley Hill)
Winterbottom, Richard


Mitchison, G. R.
Skeffington, A. M.
Woodburn, Rt. Hon. A.


Monslow, W.
Slater, Mrs. H. (Stoke, N.)
Yates, V. (Ladywood)


Morrison, Rt. Hn. Herbert (Lewis'm,S.)
Slater, J. (Sedgefield)
Zilliacus, K.


Moss, R.
Snow, J. W.



Moyle, A.
Sorensen, R. W.
TELLERS FOR THE NOES:


Mulley, F. W.
Sparks, J. A.
Mr. A. Allen and Mr. Short.

Mr. E. Fletcher: I beg to move, in page 3, line 2, to leave out "fifty" and to insert "forty."

Mr. K. Robinson: I beg formally to second the Amendment.

Question put, That "fifty" stand part of the Bill:—

The House proceeded to a Division:

Mr. Fletcher: (seated and covered): On a point of order. I think you will agree, Mr. Deputy-Speaker, that when you collected the voices there were several shouts of "No," but not a single shout of "Aye." May I assume that there is no need to have a Division, because the House was unanimous in deciding "No"?

Mr. Deputy-Speaker: There was certainly far more volume of "Noes," but I certainly did hear certain voices in the affirmative, and, therefore, decided to have a Division.

Mr. Callaghan: (seated and covered): Further to that point of order, Mr. Deputy-Speaker. None of us on this side heard any voice at all from the Government benches—none of us. May I ask whether you heard any voices from the Government benches?

Mr. Deputy-Speaker: I expressed my opinion from the probability of the case that the "Ayes" had it, and I am proving it by having a Division.

Mr. Harold Wilson: (seated and covered): On a point of order. Would it not be in accordance with the dignity of this House—

Mr. Deputy-Speaker: The Question is that "fifty" stand part of the Bill.

Mr. Wilson: (seated and covered): On a new point of order, Mr. Deputy-Speaker. Would it not be in accordance with the dignity of the House if either you or Mr. Speaker were to direct the Serjeant at Arms to get a new hat for our use? The condition of this one is deplorable.

Mr. Deputy-Speaker: Order. I cannot hear the right hon. Gentleman.

Mr. Wilson: (seated and covered): I was asking if, in accordance with the dignity of the House, would you direct the Serjeant at Arms to get a new and, if possible, up-to-date hat for use in raising points of order during a Division? This one is at least 50 years old and in a very bad condition. I would suggest that, if the Serjeant at Arms is precluded because


of the Purchase Tax on hats from getting one, the Chancellor should introduce a Supplementary Estimate for the purpose.

Division No. 74.]
AYES
[5.44 p.m.


Agnew, Cmdr. P. G.
George, J. C. (Pollok)
Maclay, Rt. Hon. John


Aitken, W. T.
Glover, D.
Macleod, Rt. Hn. Iain (Enfield, W.)


Allan, R. A. (Paddington, S.)
Godber, J. B.
Macmillan, Rt. Hn. Harold (Bromley)


Alport, C. J. M.
Gomme-Duncan, Col. A.
Macpherson, Niall (Dumfries)


Amery, Julian (Preston, N.)
Gough, C. F. H.
Maddan, Martin


Amory, Rt. Hn. Heathcoat (Tiverton)
Gower, H. R.
Maitland, Cdr. J. F. W. (Horncastle)


Anstruther-Gray, Major W. J.
Graham, Sir Fergus
Maitland, Hon. Patrick (Lanark)


Arbuthnot, John
Green, A.
Markham, Major Sir Frank


Armstrong, C. W.
Grimond, J.
Marlowe, A. A. H.


Ashton, H.
Grosvenor, Lt.-Col. R. G.
Marples, A. E.


Astor, Hon. J. J.
Gurden, Harold
Marshall, Douglas


Atkins, H. E.
Hall, John (Wycombe)
Mathew, R.


Baldwin, A. E.
Hare, Hon. J. H.
Maude, Angus


Balniel, Lord
Harris, Frederic (Croydon, N.W.)
Mawby, R. L.


Barber, Anthony
Harrison, A. B. C. (Maldon)
Maydon, Lt.-Comdr, S. L. C.


Barlow, Sir John
Harrison, Col. J. H. (Eye)
Medlicott, Sir Frank


Barter, John
Harvey, Air Cdre. A. V. (Macclesfd)
Monckton, Rt. Hon. Sir Walter


Baxter, Sir Beverley
Harvey, John (Walthamstow, E.)
Moore, Sir Thomas



Head, Rt. Hon. A. H.
Morrison, John (Salisbury)


Bell, Ronald (Bucks, S.)
Heald, Rt. Hon. Sir Lionel
Nabarro, G. D. N.


Bevins, J. R. (Toxteth)
Heath, Edward
Nairn, D. L. S.


Bidgood, J. C.
Hicks-Beach, Maj. W. W.
Neave, Airey


Biggs-Davison, J. A.
Hill, John (S. Norfolk)
Nicholson, Godfrey (Farnham)


Birch, Rt. Hon. Nigel
Hirst, Geoffrey
Nicolson, N. (B'n'm'th, E. &amp; Chr'ch)


Bishop, F. P.
Holland-Martin, C. J.
Nield, Basil (Chester)


Body, R. F.
Holt, A. F.
Noble, Comdr. A. H. P.


Boothby, Sir Robert
Hope, Lord John
Oakshott, H. D.


Bossom, Sir A. C.
Hornsby-Smith, Miss M. P.
O'Neill, Hn. Phelim (Co. Antrim, N.)


Bowen, E. R. (Cardigan)
Horsbrugh, Rt. Hon. Dame Florence
Ormsby-Gore, Hon. W. D.


Boyle, Sir Edward
Howard, Gerald (Cambridgeshire)
Orr, Capt. L. P. S.


Braithwaite, Sir Albert (Harrow, W.)
Howard, Hon. Greville (St. Ives)
Orr-Ewing, Charles Ian (Hendon, N.)


Brooke, Rt. Hon. Henry
Howard, John (Test)
Osborne, C.


Brooman-White, R. C.
Hudson, Sir Austin (Lewisham, N.)
Page, R. G.


Buchan-Hepburn, Rt. Hon. P. G. T.
Hughes Hallett, Vice-Admiral J.
Pannell, N. A. (Kirkdale)


Burden, F. F. A.
Hughes-Young, M. H. C.
Partridge, E.


Butcher, Sir Herbert
Hulbert, Sir Norman
Pilkington, Capt. R. A.


Butler, Rt. Hn. R.A. (Saffron Walden)
Hurd, A. R.
Pitman, I. J.


Campbell, Sir David
Hutchison, Sir Ian Clark (E'b'gh, W.)
Pitt, Miss E. M.


Carr, Robert
Hyde, Montgomery
Pott, H. P.


Cary, Sir Robert
Hylton-Foster, Sir H. B. H.
Powell, J. Enoch


Channon, H.
Iremonger, T. L.
Price, David (Eastleigh)


Chichester-Clark, R.
Irvine, Bryant Godman (Rye)
Price, Henry (Lewisham, W.)


Cole, Norman
Jennings, J. C. (Burton)
Raikes, Sir Victor


Cooper, Sqn. Ldr. Albert
Jennings, Sir Roland (Hallam)
Ramsden, J. E.


Cordeaux, Lt.-Col. J. K.
Johnson, Dr. Donald (Carlisle)
Remnant, Hon. P.


Corfield, Capt. F. V.
Johnson, Eric (Blackley)
Renton, D. L. M.


Craddock, Beresford (Spelthorne)
Jones, A. (Hall Green)
Robertson, Sir David


Crookshank, Capt. Rt. Hn. H. F. C.
Keegan, D.
Rodgers, John (Sevenoaks)


Crosthwaite-Eyre, Col. O. E.
Kerby, Capt. H. B.
Roper, Sir Harold


Crouch, R. F.
Kerr, H. W.
Ropner, Col. Sir Leonard


Crowder, Sir John (Finchley)
Kershaw, J. A.
Russell, R. S.


Crowder, Petre (Ruislip—Northwood)
Kirk, P. M.
Sharpies, R. C.


Cunningham, Knox
Lagden, G. W.
Simon, J. E. S. (Middlesbrough, W.)


Currie, G. B. H.
Lambert, Hon. G.
Smyth, Brig. J. G. (Norwood)


Dance, J. C. G.
Lambton, Viscount
Soames, Capt. C.


Deeds, W. F.
Lancaster, Col. C. G.
Spearman, A. C. M.


Digby, Simon Wingfield
Leather, E. H. C.
Speir, R. M.


Dodds-Parker, A. D.
Leavey, J. A.
Spens, Rt. Hn. Sir P. (Kensgt'n, S.)


Doughty, C. J. A.
Leburn, W. G.
Stanley, Capt. Hon. Richard


Drayson, G. B.
Legge-Bourke, Maj. E. A. H.
Stevens, Geoffrey


Duncan, Capt. J. A. L.
Legh, Hon. Peter (Petersfield)



Duthie, W. S.
Lennox-Boyd, Rt. Hon. A. T.
Steward, Sir William (Woolwich, W.)


Elliot, Rt. Hon, W. E.
Lindsay, Hon. James (Devon, N.)
Stewart, Henderson (Fife, E.)


Emmet, Hon. Mrs. Evelyn
Lindsay, Martin (Solihull)
Stoddart-Scott, Col. M.


Errington, Sir Eric
Lloyd, Rt. Hon. Selwyn (Wirral)
Storey, S.


Erroll, F. J.
Lloyd-George, Maj. Rt. Hon. G.
Stuart, Rt. Hon. James (Moray)


Farey-Jones, F. W.
Longden, Gilbert
Summers, G. S. (Aylesbury)


Fell, A.
Lucas, Sir Jocelyn (Portsmouth, S.)
Sumner, W. D. M. (Orpington)


Finlay, Graeme
Lucas-Tooth, Sir Hugh
Taylor, William (Bradford, N.)


Fisher, Nigel
McAdden, S. J.
Thomas, Rt. Hn. J. P. L. (Hereford)


Fletcher-Cooke, C.
Macdonald, Sir Peter
Thomas, Leslie (Canterbury)


Fort, R.
Mackeson, Brig. Sir Harry
Thomas, P. J. M. (Conway)


Foster, John
Mackie, J. H. (Galloway)
Thompson, Kenneth (Walton)


Freeth, D. K.
McLaughlin, Mrs. P.
Thompson, Lt.-Cdr. R. (Croydon, S.)

Mr. Deputy-Speaker: I will give instructions on those lines.

Ayes 241. Nos 186.

Thorneycroft, Rt. Hon. P.
Wakefield, Edward (Derbyshire, W.)
Williams, R. Dudley (Exeter)


Thornton-Kemsley, C. N.
Wakefield, Sir Wavell (St. M'lebone)
Wilson, Geoffrey (Truro)


Touche, Sir Gordon
Walker-Smith, D. C.
Wood, Hon. R.


Turton, Rt. Hon. R. H.
Ward, Hon. George (Worcester)
Woollam, John Victor


Vaughan-Morgan, J. K.
Ward, Dame Irene (Tynemouth)
Yates, William (The Wrekin)


Vickers, Miss D. H.
Webbe, Sir H.



Vosper, D. F.
Whitelaw, W.S.I.(Penrith &amp; Border)
TELLERS FOR THE AYES:


Wade, D. W.
Williams, Paul (Sunderland, S.)
Mr. Redmayne and Mr. Wills.




NOES


Ainsley, J. W.
Griffiths, William (Exchange)
Plummer, Sir Leslie


Albu, A. H.
Hale, Leslie
Popplewell, E.


Allen, Scholefield (Crewe)
Hall, Rt. Hn. Glenvil (Colne Valley)
Price, J. T. (Westhoughon)


Bacon, Miss Alice
Hamilton, W. W.
Price, Philips (Gloucestershire, W.)


Bartley P.
Harrison, J. (Nottingham, N.)
Proctor, W. T.


Benn, Hn. Wedgwood (Bristol, S.E.)
Hastings, S.
Rankin, John


Benson, G.
Healey, Denis
Reeves, J.


Beswick, F.
Henderson, Rt. Hn. A. (Rwly Regis)
Reid, William


Bevan, Rt. Hon. A. (Ebbw Vale)
Herbison, Miss M,
Rhodes, H.


Blackburn, F.
Holman, P.
Robens, Rt. Hon. A.


Blenkinsop, A.
Holmes, Horace
Roberts, Albert (Normanton)


Blyton, W. R.
Hubbard, T. F.
Robinson, Kenneth (St. Pancras, N.)


Bowden, H. W. (Leicester, S.W.)
Hughes, Emrys (S. Ayrshire)
Rogers, George (Kensington, N.)


Boyd, T. C.
Hughes, Hector (Aberdeen, N.)
Ross, William


Braddock, Mrs. Elizabeth
Hunter, A. E.
Royle, C.


Brockway, A. F.
Hynd, H. (Accrington)
Shinwell, Rt. Hon. E.


Broughton, Dr. A. D. D.
Irving, S. (Dartford)
Silverman, Julius (Aston)


Burke, W. A.
Jay, Rt. Hon. D. P. T.
Silverman, Sydney (Nelson)



Jeger, George (Goole)
Simmons, C. J. (Brierley Hill)


Butler, Herbert (Hackney, C.)
Jeger, Mrs. Lena (Holbn &amp; St. Pncs., S.)
Skeffington, A. M.


Butler, Mrs. Joyce (Wood Green)
Jenkins, Roy (Stechford)
Slater, Mrs. H. (Stoke, N.)


Callaghan, L. J.
Johnson, James (Rugby)
Slater, J. (Sedgefield)


Carmichael, J.
Jones, Rt. Hn. A. Creech (Wakefield)
Sorensen, R. W.


Castle, Mrs. B. A.
Jones, Elwyn (W. Ham, S.)
Sparks, J. A.


Champion, A. J.
Jones, Jack (Rotherham)



Chapman, W. D.
Kenyon, C.
Steele, T.


Chetwynd, G. R.
Key, Rt. Hon. C. W.
Stokes, Rt. Hon. R. R. (Ipswich)


Clunie, J.
King, Dr. H. M.
Strachey, Rt. Hon. J.


Coldrick, W.
Lawson, G. M.
Strauss, Rt. Hon. George (Vauxhall)


Collick, P. H. (Birkenhead)
Ledger, R. J.
Summerskill, Rt. Hon. E.


Collins, V. J. (Shoreditch &amp; Finsbury)
Lee, Frederick (Newton)
Sylvester, G. O.


Corbet, Mrs. Freda
Lever, Harold (Cheetham)
Taylor, Bernard (Mansfield)


Cove, W. G.
Lewis, Arthur
Taylor, John (West Lothian)


Craddock, George (Bradford, S.)
Lipton, Lt.-Col. M.
Thomas, Iorwerth (Rhondda, W.)


Cronin, J. D.
MacColl, J. E.
Thomson, George (Dundee, E.)


Crossman, R. H. S.
McKay John (Wallsend)
Tomney, F.


Cullen, Mrs. A.
McLeavy, Frank
Turner-Samuels, M.


Daines, P.
MacPherson, Malcolm (Stirling)
Ungoed-Thomas, Sir Lynn


Dalton, Rt. Hon. H.
Mahon, s.
Viant, S. P.


Darling, George (Hillsborough)
Mallalieu, E. L. (Brigg)
Warbey, W, N.


Davies, Stephen (Merthyr)
Marquand, Rt. Hon. H. A.
Weitzman, D.


Deer, G.
Mason, Roy
Wells, Percy (Faversham)


de Freitas, Geoffrey
Messer, Sir F.
Wells, William (Walsall, N.)


Delargy, H. J.
Mikardo, Ian
West, D. G.


Dodds, N. N.
Mitchison, G. R.
Wheeldon, W. E.


Donnelly, D. L.
Monslow, W.
White, Mrs. Eirene (E. Flint)


Dugdale, Rt. Hn. John (W. Brmwch)
Morrison, Rt. Hn. Herbert (Lewis'h, S.)
White, Henry (Derbyshire, N.E.)


Ede, Rt. Hon. J. C.
Moss, R.
Wigg, George


Edwards, Rt. Hon. John (Brighouse)
Moyle, A.
Wilkins, W. A.


Edwards, Rt. Hon. Ness (Caerphilly)
Mulley, F. W.
Willey, Frederick


Edwards, W. J. (Stepney)
Neal, Harold (Bolsover)
Williams, David (Neath)


Evans, Edward (Lowestoft)
Noel-Baker, Francis (Swindon)
Williams, Rev. Llywelyn (Ab'tillery)


Evans, Stanley (Wednesbury)
Oram, A. E,
Williams, W. R. (Openshaw)


Fernyhough, E.
Orbach, M.
Williams, W. T. (Barons Court)


Fletcher, Eric
Oswald, T.
Willis, Eustace (Edinburgh, E.)


Forman, J. C.
Owen, W. J.
Wilson, Rt. Hon. Harold (Huyton)


Fraser, Thomas (Hamilton)
Padley, W. E.
Winterbottom, Richard


Gaitskell, Rt. Hon. H. T. N.
Paling, Will T. (Dewsbury)
Woodburn, Rt. Hon. A.


Gibson, C. W.
Palmer, A. M. F.
Yates, V. (Ladywood)


Gordon Walker, Rt. Hon. P. C.
Pannell, Charles (Leeds, W.)
Zilliacus, K.


Greenwood, Anthony
Pargiter, G. A.



Grey, C. F.
Parkin, B. T.
TELLERS FOR THE NOES:


Griffiths, David (Rother Valley)
Pearson, A.
Mr. A. Allen and Mr. Short.


Griffiths, Rt. Hon. James (Llanelly)
Peart, T. F.

Mr. Hugh Gaitskell: I beg to move. in page 3, line 10, at the end to insert:
Provided also that the said amendment shall not apply, unless the underwriter can show

to the satisfaction of the surveyor of taxes that in the year preceding the year of assessment he has either received a premium income amounting to not less than the sum of ten thousand dollars in the currency of the United States of America or paid losses amounting to not less than that sum in that currency.


This Amendment has been put down because of a reply given by the Financial Secretary, in Committee. It will be recalled that we then tabled a similar Amendment, but the amount mentioned in it was 1,000 dollars. The purpose of the Amendment was to ensure that the concession to underwriters should go only to those who could show that they had a premium income in dollars.
In commenting on our Amendment, the Financial Secretary said it was quite unnecessary because every underwriter had at any rate some dollar business. He implied, as I think he will agree, that to insert the figure of 1,000 dollars would rule nobody out at all. We said at the time that if that were the case it was our figure which was wrong and not the general principle. Accordingly, we have now put down a similar Amendment substituting the words "ten thousand dollars for the words" one thousand dollars."
I do not think it is necessary for me to go over all the arguments in favour of giving a greater incentive to underwriters to obtain dollar business. The whole of the Government's argument for making this concession is precisely that the dollar income is important to us, and there are therefore no arguments about it. In the circumstances, I feel sure that the principle implied in the Amendment is accepted by the Government—namely, that the concession should go to those who do what appears to be a reasonable, though not an excessive, amount of dollar business.
I do not propose to argue the matter further. We think we have substantially met the Financial Secretary's point of view in our Amendment and we hope he can tell us, on behalf of the Government, that he is prepared to accept it.

Mr. H. Brooke: I have not a word to say against the objective which the right hon. Member for Leeds, South (Mr. Gaitskell) specified—that we should seek to encourage, as far as possible, people who are doing dollar business and earning dollars. I would remind him, however, that it was not my only objection to the Amendment in Committee that a limit of 1,000 dollars a year would be a somewhat foolish limit. I gave other reasons and I will repeat them if he wishes. Since he said he would not repeat his case,

however, perhaps the most helpful thing is for me to address myself to the practical effects which the Amendment would have if it were accepted.
The Amendment suggests that the provisions in Clause 3 about Lloyd's underwriters are to be a sort of reward for earning dollars. In the Amendment the right hon. Gentleman would provide that nobody could have advantage of the Clause unless he could show this premium income in dollars or could prove that he had suffered losses in dollars. But, of course, it is not as a reward for earning dollars that the Chancellor has introduced the Clause; it is as a stimulus to them to go out and earn more dollars. In a sense, therefore, the Amendment puts the cart before the horse.
If the right hon. Gentleman will examine carefully with me what would happen, I think he will see that it would be ill-advised to write an Amendment like this into the Bill. The whole object of the Clause is to help underwriters to build up the substantial reserves which are necessary for carrying on overseas business, and especially American business, on an increasing scale. The trouble is that the Amendment would handicap all the newer underwriters—those who are in process of building up their business.
Some hon. Members have suggested that this Lloyd's underwriting is easy money for old gentlemen with a pile of money already. Surely the very people they would want to see entering it, therefore, are the vigorous young men who want to push ahead. Those are the people who would be rather heavily hit by the Amendment. They have not yet had time to build up enough reserves to enable them to do American business on a large scale and they would be just the people who would be debarred from building up reserves. If they are to be so restricted—and restricted in a discriminatory fashion, if I may say so—it would be rash of them to go ahead with the business which we want them to do.
6.0 p.m.
There is also a further consideration which I think the right hon. Member will quickly appreciate. It is that an Amendment of this kind might easily tempt some underwriters to build up their dollar premium income by accepting imprudent risks. Here is the test, "You are not


to have certain advantages until you can show to the surveyor of taxes that you are receiving a premium income amounting to no less a sum than 10,000 dollars. If you have not got that precise sum you must somehow get it by the end of the year." That is the sort of incentive one ought not to hold out to anyone in the insurance business. We ought not to give them artificial tax advantages for working up their premium by hook or by crook to a certain level—

Mr. M. Turner-Samuels: That is a very unfortunate expression.

Mr. Brooke: Not at all. It is just what I am trying to indicate—that this would be a temptation to accept unsound business.

Mr. Turner-Samuels: The right hon. Gentleman said "by hook or by crook."

Mr. Brooke: I should have thought the hon. and learned Member would understand that phrase by now.

Mr. Turner-Samuels: Yes, that is true. That is why I queried it.

Mr. Brooke: The other part of the Amendment, in certain circumstances, would make the payment of losses amounting to 10,000 dollars the criterion. It would be a mistake to make the test the payment of losses in dollars up to a certain amount. The time for adding to reserves is surely the time when one's experience is favourable, not when it is unfavourable. To choose a moment when one is making substantial losses to add to one's reserves, again seems to be putting the cart before the horse. It is when a man's profits are high that he should have the opportunity to use those substantial profits to enable him to go out and do further business.
There is a further point I would put to the right hon. Member. He was a member of the Government when the original provision was inserted in the law in 1949. It was extended in 1952 and there was opportunity for criticising it on just these grounds at that time, yet no criticism was voiced. On both those occasions, as I have said when speaking on a previous Amendment, the House was making a more liberal concession to underwriters in the sense that the House was granting complete exemption from Surtax unless the underwriter withdrew from business before the end of his life. In this case there is no question of complete

exemption. Therefore, it would seem rather strange that when we are making a less forthright concession we should seek to tie it up with this artificial restriction, or criterion, which is inserted in the Amendment.
For those reasons, I hope that the right hon. Member will feel disposed to withdraw the Amendment. I recognise entirely the purpose with which he has moved it. I hope I showed on the Committee stage that the idea was by no means antipathetic to us, but as I also said on Committee stage that it would be a new feature in our tax laws if one were to give people tax advantages because they had earned their income in a certain way and not in another way. For all those reasons and because this really would have practical effects which would be adverse to the type of business the House is seeking to encourage, I could not recommend the House to accept the Amendment.

Mr. K. Robinson: I think the House was gratified to note, in the course of the remarks of the Financial Secretary on the last Amendment, that he claimed he thoroughly understood the Clause. I do not know whether that would equip him for taking up the profession of accountancy or underwriting in the future when the electors of Hampstead decide to follow the excellent example of their neighbours in the St. Pancras constituency do.
Be that as it may, the right hon. Gentleman does not understand the practice of underwriting, or he would not have advanced the arguments he has advanced this afternoon. He admitted freely that one of the objections to the Amendment has been over-ridden by our stepping up the limit from 1,000 to 10,000 dollars, but he put forward two other main objections, neither of which holds water. In the first case, the right hon. Gentleman said that a limit of this kind would discourage new, young, vigorous underwriters from pushing ahead. That, as I suggested before, discloses a complete ignorance of the way in which Lloyds works.
A new, young, vigorous underwriter is a man who goes to the Committee of Lloyd's with £10,000 or £20,000 and says, "I want to become an underwriting member." Almost invariably, that man joins an existing underwriting syndicate


where the work is done by an underwriting agent and his premium in dollars, or any other currency, is exactly the same as that of any existing member of that syndicate who has the same share of the risks of underwriting. So the young underwriter would not be in any way deterred by the fact that he has to show a premium of 10,000 dollars before lie can take advantage of the concession.
Another objection of the right hon. Gentleman was that it would be a bad thing because this proposal would tend to encourage underwriters to accept imprudent risks. The right hon. Gentleman has already told us in the course of debates in Committee that a large part of the dollar business is in the form of excess loss risks. If I may remind the right hon. Gentleman of the fact, it was I who told him that on Committee stage, so there is no difference between us. Those are the very risks which time and again bring catastrophic losses, risks which the American insurance market is only too happy to unload on to Lloyd's and the British insurance market because that relieves the Americans of liability.
From time to time there are hurricanes which bring about losses even on these excess loss risks. When we do not have hurricanes in the United States, we often have very bad floods and underwriting this excess loss business which carries a very low rate of premium is, on balance, an unprofitable business. By implication, the Financial Secretary accepts that fact because he said that the underwriters have to accept that type of risk in order to get more attractive bread and butter business. That is perfectly true and, in the parlance of Lloyd's brokers, that business is known as the "bribe" to get the unattractive business underwritten. But I still say that we have no information which suggests that the net value of this business to the invisible exports of this country justifies this concession, or that it is a positive rather than a negative amount on balance.
In those circumstances, I do not think that any of the objections made by the Financial Secretary holds water. The Amendment seems perfectly reasonable and is only an attempt to include in the Bill one of the reasons that the Government have put forward for making this concession.

Mr. E. Fletcher: We had a very laboured speech from the Financial Secretary. I want to ask him one question. Does he, by this Clause, want to give a benefit to Lloyd's underwriters who do not earn any dollar revenue for this country? When all has been said about this Amendment, the issue resolves itself into that simple question.
The only ground on which the Financial Secretary has ever tried to justify this additional concession and privilege to Lloyd's underwriters is that it will help our balance of payments and produce some dollar income. We therefore want to know whether the right hon. Gentleman also wishes that the benefit of this privilege should be extended to those of Lloyd's underwriters who do not do any dollar risk insurance and do not bring any, or any substantial, dollar revenue to this country. If the Financial Secretary does want to help such underwriters, the whole basis of his attempted justification of the Clause fails. If he does not want to assist them, he should accept the Amendment. The issue seems to me to be as simple as that.
When one discounts all the verbiage of the right hon. Gentleman, there is very little more to be said. He endeavoured to say that it would be something novel to write into our Income Tax legislation a taxation provision that was conditional upon some special kind of income. That is the wrong way to look at it. It is the Financial Secretary who, by the Clause, is writing something novel into our Income Tax legislation.
I know that the principle was adopted in 1949 and extended in 1952, but the Clause carries it a stage further. The fact remains that this special privilege of relief from Surtax to help a small limited class of taxpayer is something entirely novel in our Income Tax code. Therefore, its extension can only be justified upon grounds of national advantage. The whole object of the Amendment is to tie the additional privileges to the earning of dollar revenue. There can be no administrative difficulty in giving effect to our Amendment, and I hope that before we conclude this discussion we shall have from the Financial Secretary a clear answer to this specific question.

Mr. Parkin: A word ought to be said in reply to the Financial Secretary's suggestion that criticisms of the kind that have


been voiced this afternoon were not made five or six years ago when similar concessions were being made in the Budgets of those years. The reason why the discussion was not prolonged at the time was that hon. Gentlemen opposite would gladly accept anything which improved the position of Lloyd's underwriters—or, for that matter, anyone else in the City—and members of the party who then supported the Government fully understood the object of the concession. It was for one purpose and one purpose only: to help the export trade, it being in this case the export of a peculiar kind of insurance.
We understand perfectly that if we have to earn a living in the world, we must supply what our customers need. If they need a special type of umbrella or handwoven tie, or a peculiar type of insurance, we ought to try to sell it, but the Financial Secretary must not expect Members on this side of the House to admit that, as far as our home affairs are concerned, any aspect of the country's economic life ought to depend on the existence of a number of very rich men. That is an old theory which is surely outworn by now, and least of all ought such a theory to be put forward in connection with insurance.
We must, therefore, protest at any attempt to smuggle in through this concession, the backing up of a quite outmoded method of insuring general risks. If it is necessary because customers overseas are interested in placing that insurance in that way, naturally we would support any thing that would bring earnings from overseas into this country, but to extend it as a general principle or to expect any kind of support for it from this side of the House, is going too far, and the right hon. Gentleman must expect opposition from us.

6.15 p.m.

Mr. Chapman: I have listened to both days of debate on this matter and I must say that the Financial Secretary's replies on this latest occasion were the most inadequate of the lot. He said that it would be quite wrong to include the Amendment because it would mean that the small firm which went out to get new insurance business in the dollar areas would not obtain the benefit. The right hon. Gentleman has never given that as the prime reason for this concession

at any previous stage of the Bill. His reason for this concession to Lloyd's has been nothing to do with getting new business but has been the recent catastrophes, which, we are told, have denuded the reserve funds. The right hon. Gentleman now comes along with a totally new argument on the Amendment.
Secondly, the right hon. Gentleman said that the Amendment would harm the underwriters because they would not at this stage be doing £10,000 worth of dollar business. If they are not doing it, they do not need any help at present. Their reserve funds should be quite big enough to carry the risks on £10,000 worth of dollar business at the present time. I fail to see that at this time we ought to be going out of our way to give increased tax concessions to new business in America on this small scale.
When the right hon. Gentleman said that it is because it is a great business involving new losses that the concession has been introduced in the first place, his argument amounted to a lot of mumbo-jumbo. He did not see any justification for not meeting the perfectly reasonable request contained in the Amendment. Its intention, after all, is to say, "Unless you are doing business that will be subject to enormous risks on the scales that have been so catastrophic, you do not deserve the amendment in the law."
The way in which we put it in the Amendment is reasonable. Underwriters must be doing reasonable business, and it must therefore, by definition, be of the kind that might suffer great catastrophe. Up to that point, as my hon. Friend the Member for St. Pancras, North (Mr. K. Robinson) said, it is likely to be the more lucrative business. Why, therefore, is the tax concession needed? The Financial Secretary has made the poorest case that we have heard made on any stage of the Bill.

Mr. H. Brooke: I should like, briefly, to take up the points that have been made. The hon. Member for St. Pancras, North (Mr. K. Robinson) seems to be still seeking to convey to the House that the only insurance business which comes from the United States to London is the business that the American insurer will not touch. If the hon. Member had been concerned with insurance himself, I do


not think he would repeat that kind of statement.
The hon. Member for Islington, East (Mr. E. Fletcher) sought to suggest that a considerable number of people who did not deserve it would be able to get the benefit of the Clause.

Mr. E. Fletcher: I asked the right hon. Gentleman whether it was the Government's intention to give the benefit of this concession to underwriters who do not do any substantial amount of dollar insurance underwriting.

Mr. Brooke: I said during the Committee stage that a substantial part of the business of all, or virtually all, Lloyd's syndicates already consisted of risks outside the United Kingdom. On the previous Amendment, I gave facts and figures in support of the case that a substantial part of Lloyd's business is with America.
The Amendment mentions only dollars but the House will appreciate that dollars are not the only currency with which we are interested. Lloyd's underwriters are doing the country a good service—and so is any other exporter, of either visible or invisible exports—if they are earning other hard currencies in addition to dollars.

The hon. Member for Northfield (Mr. Chapman) was particularly concerned about the underwriter who, it seemed to him, did not qualify for any advantage because he was not doing the business. I do not think the hon. Member quite appreciates that, as I said, this provision is intended as an incentive and not as a reward. If a man is not doing much dollar business, it is thoroughly desirable to give him an incentive to do more. The Amendment, however, would be a handicap to him in building up his reserves to do business on a larger scale. The hon. Member spoke as though these provisions were concerned only with an enormous business on a grand scale, but surely he knows that large risks are split up between many underwriters and that the amount carried by any one in any given case may be quite small though the totality of the risk may be enormous.

My case against the Amendment is not that its underlying purpose is wrong, but simply that it would not improve the Bill. It would create certain practical difficulties, and it would not secure any worthwhile result. The incentive must be a general incentive.

Question put, That those words be there inserted in the Bill:—

The House divided: Ayes 169, Noes 224.

Mitchison, G. R.
Robens, Rt. Hon. A.
Tomney, F.


Monslow, W.
Roberts, Albert (Normanton)
Turner-Samuels, M.


Morrison, Rt. Hn. Herbert (Lewis'm, S.)
Robinson, Kenneth (St. Pancras, N.)
Ungoed-Thomas, Sir Lynn


Moyle, A.
Rogers, George (Kensington, N.)
Viant, S. P.


Neal, Harold (Bolsover)
Ross, William
Warbey, W.N.


Oram, A. E.
Royle, C.
Weitzman, D.


Orbach, M.
Shinwell, Rt. Hon. E.
Wells, Percy (Faversham)


Oswald, T.
Silverman, Julius (Aston)
Wheeldon, W. E.


Owen, W. J.
Silverman, Sydney (Nelson)
White, Mrs. Eirene (E. Flint)


Padley, W. E.
Simmons, C. J. (Brierley Hill)
White, Henry (Derbyshire, N.E.)


Paling, Will T. (Dewsbury)
Skeffington, A. M.
Wigg, George


Palmer, A. M. F.
Slater, Mrs. H. (Stoke, N.)
Wilkins, W. A.


Pannell, Charles (Leeds, W.)
Slater, J. (Sedgefield)
Willey, Frederick


Parker, J.
Sorensen, R. W.
Williams, David (Neath)


Parkin, B. T.
Sparks, J. A.
Williams, Rev. Llywelyn (Ab'tillery)


Pearson, A.
Steele, T.
Williams, W. R. (Openshaw)


Popplewell, E.
Strachey, R. Hon. J.
Williams, W. T. (Barons Court)


Price, J. T. (Westhoughton)
Strauss, Rt. Hon. George (Vauxhall)
Willis, Eustace (Edinburgh, E.)


Price, Philips (Gloucestershire, W.)
Summerskill, Rt. Hon. E.
Wilson, Rt. Hon. Harold (Huyton)


Proctor, W. T.
Sylvester, G. O.
Woodburn, Rt. Hon. A.


Rankin, John
Taylor, Bernard (Mansfield)
Yates, v. (Ladywood)


Reeves, J.
Taylor, John (West Lothian)
Zilliacus, K.


Reid, William
Thomas, Iorwerth (Rhondda, W.)



Rhodes, H,
Thomson, George (Dundee, E.)
TELLERS FOR THE AYES:




Mr. A. Allen and Mr. Short.




NOES


Agnew, Cmdr. P. G.
Digby, Simon Wingfield
Kerby, Capt. H. B.


Aitken, W. T.
Doughty, C. J. A.
Kerr, H. W.


Allan, R. A. (Paddington, E.)
Duncan, Capt. J. A. L.
Kershaw, J. A.


Alport, C. J. M.
Emmet, Hon. Mrs. Evelyn
Kirk, P. M.


Amery, Julian (Preston, N.)
Errington, Sir Eric
Lagden, G. W.


Amory, Rt. Hn. Heathcoat (Tiverton)
Farey-Jones, F. W.
Lambert, Hon. G.


Anstruther-Gray, Major W. J.
Fell, A.
Lambton, Viscount


Arbuthnot, John
Finlay, Graeme
Lancaster, Col. C. G.


Armstrong, C. W.
Fisher, Nigel
Leather, E. H. C.


Ashton, H.
Fort, R.
Leavey, J. A.


Astor, Hon. J. J.
Fraser, Hon. Hugh (Stone)
Leburn, W. G.


Atkins, H. E.
Freeth, D. K.
Legg-Bourke, Maj. E. A. H.


Baldwin, A. E.
George, J. C. (Pollok)
Legh, Hon. Peter (Petersfield)


Balniel, Lord
Glover, D.
Lindsay Hon. James (Devon, N.)


Barber, Anthony
Gomme-Duncan, Col. A.
Lindsay, Martin (Solihull)


Barlow, Sir John
Gough, C. F. H.
Lloyd, Rt. Hon. Selwyn (Wirral)


Barter, John
Gower, H. R.
Lloyd-George, Maj. Rt. Hon. C.


Baxter, Sir Beverley
Graham, Sir Fergus
Longden, Gilbert


Bell, Ronald (Bucks, S.)
Grant-Ferris, Wg Cdr. R.(Nantwich)
Lucas, Sir Jocelyn (Portsmouth, S.)


Bevins, J. R. (Toxteth)
Green, A.
Lucas-Tooth, Sir Hugh


Bidgood, J. c.
Grimond, J.
McAdden, S. J.


Biggs-Davison, J. A.
Grosvenor, Lt.-Col. R. G.
Macdonald, Sir Peter


Birch, Rt. Hon. Nigel
Gurden, Harold
Mackeson, Brig. Sir Harry


Bishop, F. P.
Hall, John (Wycombe)
Mackie, J. H. (Galloway)


Body, R, F.
Harris, Frederic (Croydon, N.W.)
McLaughlin, Mrs. P.


Boothby, Sir Robert
Harrison, Col. J. H. (Eye)
Maclay, Rt. Hon. John


Bossom, Sir A. C.
Harvey, Air Cdre. A. V. (Macclesfd)
Macleod, Rt. Hn. Iain (Enfield, W.)


Bowen, E. R. (Cardigan)
Harvey, John (Walthamstow, E.)
Macmillan, Rt. Hn. Harold(Bromley)


Boyle, Sir Edward
Head, Rt. Hon. A. H.
Macpherson, Niall (Dumfries)


Braithwaite, Sir Albert (Harrow, W.)
Heald, Rt. Hon. Sir Lionel
Maddan, Martin


Brooke, Rt. Hon. Henry
Heath, Edward
Maitland, Cdr. J. F. W. (Horncastle)


Brooman-White, R. C.
Hicks-Beach, Maj. W. W.
Markham, Major Sir Frank


Browne, J. Nixon (Craigton)
Hill, John (S. Norfolk)
Marlowe, A. A. H.


Buchan-Hepburn, Rt. Hon. P. G. T.
Hirst, Geoffrey
Marples, A. E.


Burden, F. F. A.
Holland-Martin, C. J.



Butcher, Sir Herbert
Hope, Lord John
Marshall, Douglas


Butler, Rt. Hn. R. A.(Saffron Walden)
Hornsby-Smith, Mitt M. P.
Mathew, R.


Campbell, Sir David
Horsbrugh, Rt. Hon. Dame Florence
Mawby, R. L.


Carr, Robert
Howard, Gerald (Cambridgeshire)
Maydon, Lt.-Comdr, S. L. C.


Gary, Sir Robert
Howard, Hon. Greville (St. Ives)
Medlicott, Sir Frank


Channon, H.
Howard, John (Test)
Monckton, Rt. Hon. Sir Walter


Chichester-Clark, R.
Hudson, Sir Austin (Lewisham, N.)
Moore, Sir Thomas


Cole, Norman
Hughes, Hallett, Vice-Admiral J.
Morrison, John (Salisbury)


Cordeaux, Lt.-Col. J. K.
Hughes-Young, M. H. C.
Nabarro, G. D. N.


Corfield, Capt. F. V.
Hulbert, Sir Norman
Nairn, D. L. S.


Craddock, Beresford (Spelthorne)
Kurd, A. R.
Neave, Airey


Crookshank, Capt. Rt. Hn. H. F. C.
Hutchison, Sir Ian Clark (E'bgh, W.)
Nicholson, Godfrey (Farnham)


Crosthwaite-Eyre, Col. O. E.
Hyde, Montgomery
Nicolson, N. (B'n'm'th, E. &amp; Chr'ch)


Crouch, R. F.
Hylton-Foster, Sir H. B. H.
Nield, Basil (Chester)


Crowder, Sir John (Finchley)
Iremonger, T. L.
Noble, Comdr, A. H. P.


Crowder, Petre (Ruislip—Northwood)
Irvine, Bryant Godman (Rye)
Oakshott, H. D.


Cunningham, Knox
Jennings, J. C. (Burton)
O'Neill, Hn. Phelim (Co. Antrim, N.)


Currie, G. B. H.
Johnson, Dr. Donald (Carlisle)
Ormsby-Gore, Hon. W. D.


Dance, J. C. G.
Johnson, Eric (Blackley)
Orr, Capt. L. P. S.


D'Avigdor-Goldsmid, Sir Henry
Jones, A. (Hall Green)
Orr-Ewing, Charles Ian (Hendon, N.)


Deedes, W. F.
Keegan, D.
Osborne, C.

Page, R. G.
Smyth, Brig. J. G. (Norwood)
Vickers, Miss J. H.


Pannell, N. A. (Kirkdale)
Spearman, A. C. M.
Vosper, D. F.


Partridge, E.
Speir, R. M.
Wade, D. W.


Pilkington, Capt. R. A.
Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)
Wakefield, Edward (Derbyshire, W.)


Pitman, I. J.
Stanley, Capt. Hon. Richard
Wakefield, Sir Wavell (St. M'lebone)


Pitt, Miss E. M.
Steward, Sir William (Woolwich, W.)
Walker-Smith, D. C.


Pott, H. P.
Stewart, Henderson (Fife, E.)
Ward, Hon. George (Worcester)


Price, David (Eastleigh)
Stoddart-Scott, Col. M.
Ward, Dame Irene (Tynemouth)


Price, Henry (Lewisham, W.)
Storey, S.
Webbe, Sir H.


Raikes, Sir Victor
Stuart, Rt. Hon. James (Moray)
Whitelaw, W.S.I.(Penrith &amp; Border)


Ramsden, J. E.
Summers, G. S. (Aylesbury)
Williams, Paul (Sunderland, S.)


Redmayne, M.
Sumner, W. D. M. (Orpington)
Williams, R. Dudley (Exeter)


Remnant, Hon. P.
Taylor, William (Bradford, N.)
Wills, G. (Bridgwater)


Renton, D. L. M.
Thomas, Rt. Hn. J. P. L. (Hereford)
Wilson, Geoffrey (Truro)


Rodgers, John (Sevenoaks)
Thomas, Leslie (Canterbury)
Wood, Hon. R.


Roper, Sir Harold
Thomas, P. J. M. (Conway)
Woollam, John Victor


Ropner, Col. Sir Leonard
Thompson, Kenneth (Walton)
Yates, William (The Wrekin)


Russell, R. S.
Thornton-Kemsley, C. N.



Sharples, R. c.
Touche, Sir Gordon
TELLERS FOR THE NOES:


Simon, J. E. S. (Middlesbrough, W.)
Vaughan-Morgan, J. K.
Mr. R. Thompson and Mr. Godber.

6.30 p.m.

Mr. H. Brooke: I beg to move, in page 4, line 21, to leave out from "and" to "and" in line 22 and to insert:
assessments may be made in respect of tax so chargeable at any time within the period permitted by subsection (2) of section forty-seven of the Income Tax Act, 1952 (which, as extended by subsection (3) of section two hundred and twenty-nine of that Act provides that surtax and other assessments on the personal representatives of a deceased person in respect of income arising before the death must he made within three years from the year in which the death occurred), notwithstanding the time limit in subsection (1) of that section (which provides that assessments shall be made within six years from the year to which the assessments relate).".
The Amendment deals with a small but useful point. Hon. Members will see that subsection (4) removes for the purpose of the Clause the time limit on the making of assessments. That is necessary under this conception, because when a person dies it may not be six years only which it will be necessary to go back to assess the Surtax but a longer period. It has come to my right hon. Friend's attention that the subsection might also render it possible for considerable delay to take place before any assessment is made after the death of the underwriter.
At present, under the existing law, which is Section 47 (2) of the Income Tax Act, 1952, an assessment on a dead man's personal representatives in respect of the income of the man who has died must be made not later than three years after the end of the year of assessment in which his death occurred. That is a valuable safeguard for the executors. That three-year protection would also be swept away by subsection (4) if we did not introduce the Amendment.
The sole purpose of the Amendment, therefore, is to make it clear that that three-year limit after the death of the underwriter shall be preserved and that it will not be open to the authorities to delay beyond the normal period of three years the making of the assessment.

Mr. E. Fletcher: I am glad to see that the Financial Secretary has realised the strength of what we said to him in Committee. Some of my hon. Friends and I protested about the hardship that would result to a great many people, particularly executors, if the Bill were allowed to remain in its present form. I said then that it was really intolerable to nut into an Act of Parliament a provision that there should be no time limit whatever within which the Inland Revenue could make an assessment of this kind. I am not sure whether I am entitled to the credit for the change now announced. What is more likely is that the Financial Secretary has been reading what was said by the Lord Chief Justice, Lord Goddard, at the Old Bailey yesterday in the case of Walter Schick and Hyman Jack Glenton.
The Lord Chief Justice had some very severe strictures to make upon the remissness of the Revenue officials in the gross delay on their part in dealing with tax matters. He went so far as to say that it was cruel to keep people in suspense and that it was because of the cruelty that had been imposed unnecessarily by Revenue officials that in the case of these two criminals, tax evaders, he refrained from the course which he otherwise would have taken of sending them to prison. If it is cruelty in the case of criminals, a fortiori it is cruelty to keep innocent people in protracted suspense about the amount of their tax liability.
This is not an isolated case, and I am glad that the Amendment gives us an opportunity to protest about some of the delays that are taking place in the Inland Revenue Department on this subject. There is no justification for them at all. It seems to me scandalous that those who were responsible for framing this Bill should, in the first place, have had the audacity to put into it a Clause which would have enabled the Revenue, without giving the taxpayer any redress at all, to have a completely unlimited time to make assessments before the taxpayer could take it that the liability was determined. It would have been bad enough in the case of a living person, but the position would have been absolutely intolerable in the case of those who administer estates for the benefit of widows and orphans. There could have been no justification for it at all.
I am glad to find that although we have had no success so far in securing reliefs from the Chancellor in the Finance Bill, the right hon. Gentleman has seen the force of our argument in this matter and has himself put forward the Amendment.

Amendment agreed to.

Clause 4.—(PURCHASES OF SHARES BY FINANCIAL CONCERNS AND PERSONS EXEMPTED FROM TAX.)

Mr. E. Fletcher: I beg to move, in page 5, line 19, to leave out from "enactment" to the first "to" in line 21.
This is one of the most important Amendments which fall to be considered during our discussions today. As the Chancellor will appreciate, we are attempting to leave out the following words from Clause 4 (2)—
… (including, save as otherwise expressly provided, an enactment in any future Act) …
This part of the Clause deals with dividend stripping in so far as charities are affected. We had a considerable debate in Committee on dividend stripping generally and I do not propose, nor will it be necessary, in moving the Amendment, to deal with the general case. It will be sufficient to deal with dividend stripping by charities.
The Economic Secretary will remember that in Committee I suggested that dividend stripping has been practised in the last few months not only by finance companies, financial trusts and companies

engaged in pure finance transactions, but also by charities. The Economic Secretary said that in his experience there had not been very much dividend stripping by charities. I said with great respect that the hon. Gentleman was quite wrong. Since then, I have made further inquiries.
I am not animadverting on whether they are entitled to do so or not, but I have found that a number of charitable organisations have practised dividend stripping. I am not moralising about dividend stripping. The House has decided that the practice is reprehensible and should be stopped but, on the other hand, as the law stands, certain privileged exemption from taxation is given to charities.
The whole object of this Amendment is to inquire what are the Government's future intentions towards charities, because it is most significant that this part of the Bill not merely deals with charities as such under present enactments but also includes charities which will fall under any future enactments. That is a most serious thing, and I hope that we shall not find that, by some kind of side-wind in inserting into a Bill words dealing with some future enactments, we shall involve, under our dividend-stripping regulations, some bodies which, though not charities today, may fall within this definition of charities at a later date.
As the Economic Secretary will be aware, the whole subject of charities and the way in which they should be regarded by the tax law is the subject of a very considerable analysis in the recent report of the Royal Commission of the Taxation of Profits and Income. We have also had a separate Commission dealing with the whole law of charities. A great many people tend to think that a charity in the popular sense is some organisation that is necessarily worth while supporting, but that is not the precise truth, because a charity in the legal sense has come to mean something quite different.
Charities, which originally derived from the Poor Law of Elizabeth, were introduced at a time when it was not merely desirable but necessary that private bodies should engage in all kinds of philanthropic and benevolent works. The necessity for charities of that kind is obviously very much less in these days of the Welfare State, and the result today is that we have all kinds of charities which.


because they qualified under the technical legal definition of a charity, are subject to no Income Tax at all. The Royal Commission said that the result is that about £25 million a year or more is free of taxation. The Royal Commission also suggested that the subject should be very thoroughly overhauled, and that in future the legal definition of a charity should be modified and brought into line with modern requirements.
I do not criticise any body which is technically a charity for taking advantage of the law as it stands today. For example, a great many charities deliberately invite persons to subscribe, by way of a covenant, for seven years or more in order that the subscribers may save Income Tax or Surtax. I have not yet heard anybody on either side of the House suggest that that is a wrong, improper or immoral thing to do.
By analogy, the same kind of thing has been happening with regard to dividend stripping by charities. An Oxford college is a charity, for example, and has the benefit of the law relating to charities. So have a great many similar institutions. I would not like to say that any particular Oxford college, or any other college or comparable institution, has engaged in dividend stripping operations, but I think we are entitled to consider whether, if they had so engaged, they would have been doing anything reprehensible or not.
I can quite well imagine that any charitable organisations are entitled to take the view that, so long as they are regarded by the law as being charitable, they are entitled to encourage people to subscribe to its funds in such a way that enables taxpayers to avoid or evade taxation. I can imagine a plausible argument being put to the effect that if a charity saw an opportunity by some financial transaction of earning for itself twice as much as would have been made by some other kind of transaction, it would be morally justified in doing so, but I do not want to enter into the rights and wrongs of that matter.
6.45 p.m.
The effect of this Clause, as I understand, will be very considerably to limit the possibilities of dividend stripping that are available to charities. I do not,

however, take the view that it will necessarily exclude their attractiveness altogether, because, as the Financial Secretary will know, as the Bill stands, it is still only necessary for a charity to enter into one of these transactions and then retain the unstripped company which it has acquired for a period of six years or more, and then, at the end of the six years, to strip it, for the charity to obtain precisely the same advantage as it would get today.
There cannot be many investments, as the Chancellor will know, that double themselves in value in six years, and, therefore, there still is—and it is well-known in the City of London—a considerable temptation, not only on the part of charities but of all financial organisations, to buy up a company which is swollen with undistributed dividends and retain it for the period of six years and then distribute. That is why we put down our Amendment to extend the period to ten years. I do not want to pursue that, but merely to obtain from the Economic Secretary an explanation of the very mysterious words—
(including, save as otherwise expressly provided, an enactment in any future Act).
It seems to me that that might mean anything. It might mean an Act relating to Income Tax, or one relating to charities. It might mean anything. It seems to us so novel, so unprecedented, that the House certainly ought not to pass it without a great deal of further examination.

Mr. Albu: I beg to second the Amendment.
The only additional comment I should like to make on what my hon. Friend the Member for Islington, East (Mr. E. Fletcher) has said is that I cannot see why these words in brackets are needed at all. I know that no Parliament can bind any other, and, presumably, if in future enactments there were changes in the present arrangements, this situation can be safeguarded in the appropriate Bill. Why it is necessary, therefore, to include in a Bill in this Parliament phrases which are intended to safeguard what may be done in a Bill of the future, I cannot understand, unless it is considered that the Parliamentary draftsmen of the future may be so forgetful as to forget what this Bill has done, though I


do not think that that will be the case. I cannot see why the Treasury cannot accept this Amendment.

Sir E. Boyle: I am very glad to answer the point which has just been raised by the hon. Member for Edmonton (Mr. Albu). This is a technical matter, and this is really an Amendment which I know my hon. and learned Friend the Solicitor-General would have dealt with could he have been here. It was not convenient for him to come, and he has asked me to apologise to the House for his absence.
This is really a drafting point. It is simpler to include these words now rather than have to make special exceptions for cases coming within the scope of the present Clause in the event of any future legislation being enacted that confers exemption from Income Tax extending to dividends, and that is why I say that it is really a purely drafting point. If hon. Gentlemen opposite feel uneasy about it I certainly would not waste the time of the House in resisting this Amendment at any length, because it is not a matter of importance one way or the other. It is simply a matter of the convenience of drafting in the future.
The hon. Gentleman the Member for Islington, East (Mr. E. Fletcher) seemed to be suggesting that the Amendment was related to the question of what happens to charities that indulge in certain activities in the future. I can assure him that they are caught by the Clause as drafted. I took his point, but it has not much to do with this Amendment.

Sir Patrick Spens: I hope the House will prefer that this Amendment shall be accepted. I do not like this form of legislation, because in future enactments the authors might forget that this Clause exists and then find that they have done something which they never intended to do by virtue of a Clause of this nature in this Bill, which everybody will have forgotten about. So, technically, it is better that these words should be left out.

Mr. E. Fletcher: I am obliged to the Economic Secretary and I entirely agree with the right hon. and learned Gentleman. The words cause us all some concern and we are glad to know that the Amendment will be accepted.

Amendment agreed to.

Sir E. Boyle: I beg to move, in page 7, line 6, to leave out "any fund or trust and."
It would be for the convenience of the House if we could take this Amendment with the Amendment immediately following, to line 7.
This Amendment meets a point raised by my right hon. and learned Friend the Member for Kensington, South (Sir P. Spens) during the Committee stage. The words proposed modify subsection (8, b) by providing that in the definition of "person" in that paragraph the words, "any fund or trust" should be omitted and that instead there shall be added at the end of the paragraph words ensuring that any reference in the Clause to a person entitled to an exemption from Income Tax will, in relation to the trust or fund, include a reference to persons entitled to make claims for the granting of that exemption. We are grateful to my right hon. and learned Friend for drawing attention to this point and I am glad we have been able to meet it.

Sir P. Spens: I am much obliged to my hon. Friend for what he has done. It is essential that where a tax is imposed the persons accountable and made liable should be included in the Bill, and it was to make this clear that I suggested this drafting Amendment.

Amendment agreed to.

Further Amendment made: In page 7, line 7, at end insert:
and references to a person entitled to any exemption from Income Tax include, in a case of an exemption expressed to apply to income of a trust or fund, references to the persons entitled to make claims for the granting of that exemption;".—[Sir E. Boyle.]

Sir E. Boyle: I beg to move, in page 7, line 11, to leave out "fixed gross."
This time it would be for the convenience of the House if we could discuss this Amendment with the next two Amendments to lines 12 and 13, and also the Amendment to line 17.

Mr. E. Fletcher: On a point of order, Mr. Speaker. It seems to me that the Amendment to line 13 raises a rather special point and I hope that the House will have an opportunity of dealing specially with that Amendment. I hope that we shall not deal with these important matters too quickly.

Sir E. Boyle: I think I shall be able to satisfy the hon. Gentleman about that Amendment. Paragraph (c) of subsection (8) defines the shares of a class to which this Clause applies as meaning any class of shares—
… other than a class of fully-paid preference shares carrying only a right to dividends at a fixed gross rate … which … does not substantially exceed the yield generally obtainable on preference shares the prices of which are quoted on stock exchanges in the United Kingdom.…
The effect of paragraph (c) as drafted is that the only type of shares excluded is a fully-paid, non-participating preference share carrying a fixed gross rate of dividend that is not abnormally high.
Now, if I can have his attention, I come to the point in which the hon. Gentleman the Member for Islington, East (Mr. E. Fletcher) is interested. It has been represented that preference shares carrying a rate fluctuating only with the rate of Income Tax—that is to say, preference shares carrying a fixed net rate or a rate free of Income Tax up to a specified amount in the £—should not be treated less favourably under the Clause than preference dividends at a fixed gross rate. This is a minor and reasonable point and the Amendment seeks to meet it.

Amendment agreed to.

Further Amendments made: In page 7, line 12, leave out "being a rate."

In line 13, after "which," insert:
is fixed or fluctuates only in accordance with the standard rate of income tax and which.

In line 17, leave out "and" and insert "(d)."—[Sir E. Boyle.]

Orders of the Day — First Schedule.—(AMENDMENTS OF PURCHASE TAX RATES.)

Mr. Albu: I beg to move, in page 11, line 8, at the end to insert:
save and except pottery made by hand.
I appear in a guise slightly different from the one in which I appeared during the Committee stage when we debated the question of craftsmen's goods. The Economic Secretary is well aware that on that occasion I was not so much trying to suggest that there was not aesthetic value and satisfaction in the manufacture of those goods, but that there was considerable illogicality in the treatment by the Government of the different classes of craftsmen's goods. That was especially

the case as applied to the Amendment we were then discussing, which was concerned with cut glassware and silverware. There the Government were exempting types of craftsmen's goods which, in my view, are more likely to find their way on to the home market than to assist the export market.
We are dealing here with a rather different type of craftsmen's goods, namely, the wares of small craftsmen potters scattered in many parts of the country. There is at least one in the constituency of the right hon. Gentleman the Financial Secretary. He is well aware that there is a small craftsman potter in High Street, Hampstead, whose wares are to be seen in the shops round about and which give a great deal of satisfaction, so I am sure that the right hon. Gentleman appreciates what such craftsmen are doing.
7.0 p.m.
As the right hon. Gentleman will be aware from that example, if not from any other examples, a good deal of this sort of craftsmen's wares is not very expensive. It happens to be a type of work which can be purchased by people of small means who would be unable to afford particularly large quantities of cut glass or silverware. I myself know that at this time of the year one can frequently buy inexpensive Christmas presents which are the work of hand craftsmen potters. I should have thought that there was a good case for relieving this form of manufacture from the very extortionate burdens which the increased Purchase Tax will impose.
I suspect that very little export market is involved, and I doubt if any of these craftsmen will be able to keep in business. It is the sort of business which is frequently started by artists. An artist friend of mine started up in a small way making pottery, with just a wheel and a furnace, partly because he liked to decorate the ware himself, and he sold the results locally or in some London stores.
It is a small business, but one which gives a great deal of aesthetic pleasure and satisfaction. It does not involve large quantities of expensive raw materials. Some of the other craft manufactures which have been relieved of tax employ very expensive raw materials, such as gold and silver, but the raw materials of the potter are indigenous, or practically all


indigenous, and they are not likely to involve us in any balance of payments difficulties even if they are not likely to earn very large sums of foreign currency as exports. This is a concession which can give a great deal of satisfaction at very little cost. It will make no difference whatsoever to the economy, but will make a great deal of difference to the personal happiness of a large number of people.

Mr. Anthony Greenwood: I beg to second the Amendment.
We last discussed the subject of hand pottery on 22nd November, when we listened to speeches from the Economic Secretary and the Chancellor of the Exchequer. They turned on two of their four gramophone records. One was that which said that the purpose of the Purchase Tax was to reduce consumer demand, and the other was that which said that the purpose of the tax was to increase exports.
We then said that we believed that the effect of the new rate of 30 per cent. upon pottery would create unemployment in the pottery areas and especial difficulties for the artist or craftsman potter. On that occasion the Economic Secretary gave some wholly inaccurate, unreliable and out-of-date figures about the present short-time working in the pottery industry, and we had to correct him. On 2nd December, The Times correspondent in Stoke-on-Trent commented on the fact that there are now 330 workers in 26 pottery firms in the Stoke-on-Trent area who are working short time. The correspondent went on:
Pottery deliveries for the Christmas trade were completed in October, and retailers, it is expected, will restrict their orders until the next Budget.
That is a difficulty which is also affecting the artist-potter. During our previous discussions, we drew special attention to the position of 200 artist-potters. It is a matter which should occasion some comment tonight that, so far as we can see, none of the hon. Gentlemen opposite who expressed a special interest in the problem of the artist-potter on that occasion has honoured us with his presence in the Chamber tonight. On that occasion we were told by hon. Gentlemen opposite that there are 200 of these small potters in the country and that no fewer than 60 of them are engaged in this occupation in the County of Cornwall. No hon.

Gentlemen representing Cornish constituencies who spoke on 22nd November are here to continue the tight which we are now putting up.
In most cases the 200 potters are in only a very small way of business, but in most cases they are doing work which is of first-class importance and excellent design, and they are doing something which is of service to the general artistic life of the community. They are at present in grave difficulties. Many of them bought their equipment with the aid of Exchequer grants, and they are finding it very difficult to keep up their repayments of the grants. They have no export organisation to help them expand their sales overseas at a moment when their sales in the home market are being deliberately restricted by the Chancellor.
Most of them are actually working at the potter's wheel themselves, and most of them are inexperienced in all the technicalities and formalities which have to be completed if one wants to enter the export trade in present circumstances. Indeed, most of them do not even have printed catalogues which they can distribute overseas to attract attention to the wares which they have for sale. Practically all of them are living very much from hand to mouth.
During our previous discussion, the hon. Member for Bodmin (Mr. D. Marshall) said:
… the sudden imposition of 30 per cent. tax upon them will make the great majority of these people go out of business."—[OFFICIAL REPORT, 22nd November, 1955; Vol. 546, c. 1349.]
All of us will have read in The Times and other newspapers letters from these men and women which are, to say the least, sad because they constantly reveal the fact that more and more of the craftsmen and craftswomen are going out of business.
Apart from the other difficulties which I have mentioned, there is now the new difficulty of the Purchase Tax. It adds considerably to the work which the small craftsman has to do in the way of preparing invoices and all the other formalities which have to be complied with, and it means—this is of special importance—that at the moment shopkeepers are holding back from buying new supplies of hand-made pottery, at any rate until the uncertainty created by the Budget has been cleared up, and they


will no doubt, in many cases, continue to refrain from buying until the next Budget.
These men and women of whom I am speaking cannot carry the stocks, for they have not the money to do so, and more and more of them are having to close down. Something which is of great importance in the life of the country, and particularly the life of the countryside, appears to be in danger of extinction. Since our last debate, the Observer has commented on the fact that the Purchase Tax is halting the potter's wheel. It said:
Many hand potters throughout the country are likely to close down within the next few weeks; others are having to reduce the scope of their activities considerably, get rid of assistants, and look for part-time teaching jobs. This is the result of the new Purchase Tax regulations …
I hope that right hon. and hon. Gentlemen opposite feel proud of the effect which they are having on one of the foremost craft industries in our country.
When the Economic Secretary spoke to us on the previous occasion, he very charmingly and eloquently told us that the Government were prepared to look into the matter very carefully. Later in the debate, we had the benefit of hearing the Chancellor of the Exchequer, who told us why he did not think that there could be any special exemption for these craftsmen. He said:
I am informed that the Pottery Advisory Committee of the Craft Centre are considering whether to ask that the assistance to craftsmen scheme should be extended to pottery. The Centre is finding it difficult to devise a workable scheme. It would be impossible, I am told, to check that each item came up to the required standard for the relief of Purchase Tax and the question of repeats—that is, repeated examples—would be difficult to adjust in line with the severe restrictions which are placed upon repeated examples within the assistance of craftsmen scheme."—[OFFICIAL REPORT, 22nd November, 1955; Vol. 546, c. 1392–3.]
I find it difficult to believe that the Chancellor, with all the assistance that he has from his Department, is not able to devise some scheme which will give help to this very small number of people in the country. This is a serious plea which we put forward from this side of the House. We know that the Chancellor has done a great deal in other directions to encourage and develop the artistic life of the country, and I hope that tonight the Chancellor will find it possible to

tell us that he can make some concession, and thus given new hope and encouragement to the men and women who are contributing a great deal to the well-being and artistic prestige of the country.

Sir E. Boyle: I have listened with close attention to the speeches made by the hon. Member for Edmonton (Mr. Albu) and the hon. Member for Rossendale (Mr. Greenwood), and I realise that this is a subject upon which many people on both sides of the House feel honestly and strongly.
May I take up the point which the hon. Member for Rossendale has just made? He quoted the speech of the Chancellor of the Exchequer when we last discussed this matter, in which he said that the Craft Centre is finding it difficult to devise a workable scheme. I am afraid that all I can tell the hon. Gentleman is that the Craft Centre is still considering the matter, but it has not yet determined whether practicable proposals can be put to the Board of Trade. I ask hon. Members to believe that this is a difficult matter and that the Craft Centre is still very closely examining it.
I think that the House knows, from what was said when we last discussed this subject, that there are very real difficulties. The trouble is that pottery is not made by fully-mechanised or automatic methods, and there is some degree of hand work in the making or finishing of almost every article. The difficulty arises from the fact that it would be impossible to determine, over the whole range of products, what amount of hand work should be accepted to bring them into the class of pottery made by hand.
It may possibly be that hon. Members opposite who have given a lot of thought to this matter have especially in mind craftsmen who use no mechanical aid except the potter's wheel, and possibly they think that we might limit the proposed exemption in that way. But it is only when an article comes out in a rather imperfect state that it can possibly be identified as shaped by hand or in a mould. That is one of the difficulties which we have to face. While I understand the feeling of hon. Members about this, I am afraid that I have no practicable solution to put to the House, and it is for that reason that I am unable to accept the Amendment. My right hon. Friend


is, however, keen that the House should realise the interest which he takes in this subject, and, as I have said, the Craft Centre is still considering whether there are any possible proposals which it can put up to the Board of Trade.

7.15 p.m.

Mr. Gaitskell: I listened carefully to what the Economic Secretary had to say about the difficulties of defining sufficiently precisely what is hand-made pottery. I do not pretend to be an expert on this subject, but the hon. Gentleman and all of us are aware that people who are in no doubt at all as to whether or not they make hand-made pottery have been very naturally and properly protesting against the imposition of 30 per cent. Purchase Tax upon their products. They have pointed out—I think with great justification—that if, in fact, this proposal goes through, it may very well mean the complete closing down of the little businesses which they have built up.
I myself know of at least two such cases of makers of very artistic pottery. They have not a big turnover. They are not perhaps extremely well known, but they are producing the kind of product which I am sure the Government ought to encourage rather than discourage by imposing a tax upon it. I am quite sure, from what the Economic Secretary said, that he has not completely closed the door on some way of achieving the purpose of this Amendment. He also said that the Craft Centre is trying to find a suitable definition. I should like to ask him just what the implication of that is. Does that mean that if the Craft Centre produce a definition, the Government will be prepared, presumably by order, to exempt hand-made pottery from Purchase Tax altogether? I hope that is what he meant. I think that we must be quite clear about the intention before we can decide our attitude in the light of his reply. I am sure that the House would not object if the Economic Secretary wished to speak again on this matter, in order to clarify the position.

Sir E. Boyle: By leave of the House, I would say that I do not want to mislead the House, but I cannot, this afternoon, enter into any commitment at all about this matter. I should not like to leave the House with any other impression. If the Craft Centre were to consider something which it regarded as a practicable definition, and this definition were

then proposed to the Board of Trade, then, of course, the Government would have to consider it. I cannot give any definite commitment beyond that.

Mr. A. Blenkinsop: I apologise for intervening without having heard the debate, but, like many other hon. Members, I have had quite a number of representations made to me on this particular point. I was very sorry to hear that we have not had any clear statement from the Economic Secretary about the Government's attitude on this matter.
Correspondence in The Times and elsewhere makes it quite clear that many small firms are already closing down, if they have not already done so. I am sure that many of us on both sides of the House have thought that here was a case of the need for craftsmanship which should be encouraged. Indeed, I remember taking some part in our earlier discussions when the Government decided to withdraw from tax a small group of special articles purely for the reason that they recognised that there was a particular need to maintain craftsmanship.
That is true, for example, in connection with certain types of silverware and other particular goods. I remember that my hon. Friend the Member for Edmonton (Mr. Albu) had some criticisms to make about the Government's proposal on that matter, but, on the whole, the Committee then took the view that the Government were right to give some encouragement to craft industries. It seems to me astonishing that, having taken that decision about one group of craft industries, they should now apparently be taking a wholly different view.
Apparently, the Government are saying that it is not because they look with disfavour upon hand-made pottery, but rather that they find it difficult to produce a form of words which would meet this particular case. This matter has been under discussion for some considerable time, and presumably the Government had been well-advised of the views of those who speak for the people engaged in the hand-made pottery trade.
Surely it is only fair to expect that the Government should have come to a clear decision upon the matter by now. It is disappointing to find that they are not able to make a concession in this case, even if it might prove necessary to make


a slight change in the wording later. I am subject to correction, but I think that the Government could withdraw this proposal and then, later, if they experienced some difficulty, correct the matter by Statutory Instrument. If that is the case it is strange that the Economic Secretary has not been able to make a more encouraging statement, but has left us without any guarantee as to what action the Government are going to take. In view of that, the Government ought to be pressed further for a clearer statement of their intentions before we leave the matter.

Mr. Anthony Greenwood: May I, by leave of the House, put one further point to the Economic Secretary? This point was put by one of the chief artist potters to two hon. Members opposite, neither of whom has taken part in our discussions upon this subject. In the past, pottery made by these artist potters for purposes in connection with food and drink has been tax-free. Ornamental pottery, on the other hand, has been taxable beyond a sales limit of £500 gross per annum. That means that when a potter's sales rise above £10 gross per week all his output becomes subject to taxation. Can the Economic Secretary say whether the Treasury has considered the possibility of raising that sales limit from £10 to £30 a week? That would give some sort of working margin to the artist potter.

The Chancellor of the Exchequer (Mr. R. A. Butler): I have been listening to this, as to all the debates upon this Bill. Before I answer the point raised by the hon. Member for Rossendale (Mr. Anthony Greenwood), I want to be quite clear whether he is referring to the £500 limit or to a special weekly limit for pottery sales. Are they one and the same thing?

Mr. Greenwood: I was referring to the £500 limit.

Mr. Butler: I just wanted to get that point clear.
The problem of the £500 limit—which I had purposely examined before this debate began, and which I thought was one of the most human questions with which we should be dealing this afternoon—is a difficult one. There is no power to increase the limit in respect of

pottery only, and it would be extremely difficult to do so for pottery only. In any case, I am advised that to alter this limit would require a certain amount of procedure involving Parliament, that is to say, legislation.
The difficulty really arises in differentiating between pottery and other crafts. It is also very difficult to differentiate between large and small pottery firms. There is an almost unlimited graduation of size. To put the limit up to £1,000—which would be a figure corresponding to the weekly figure suggested by the hon. Member for Rossendale—would be difficult, because, although it might give some help to a firm which was just below the limit, it would be unjust to a firm that was just above it. From our examination of the pottery industry just prior to this debate we came to the conclusion that it would be very difficult to introduce a figure which would not be fair to one firm and unfair to another.
The second difficulty which would arise is that we should have requests, upon similar craftsmanship grounds, from the smaller men engaged in other trades, such as silverware, which has already been helped to some extent; jewellery, which is one of the most difficult of all the Purchase Tax problems, and was referred to by the hon. Member for Ladywood (Mr. V. Yates); lampshades, leather goods and so forth. It would be very difficult to single out pottery and leave aside the other craft industries.
In addition, we are informed that if we go above the £500 limit we shall afford a much greater opportunity for abuse, because there may be a tendency for a firm to record only a proportion of its production and sales. I am also informed that there would be very great difficulty in administering the provision, and a very great temptation to legal avoidance of the tax.
A firm which was selling £4,000 worth a year—which would be four times what the limit might be raised to—could split itself into four legal persons by setting up subsidiary companies, which would keep below the limit. We have experienced this problem to a very minor extent in connection with the £500 rate of exemption. We have had difficulty with one trade, although I shall not mention which one. I am informed that this


provision would be extremely difficult to administer.
The hon. Member for Rossendale may well see that for those five reasons I find it difficult to alter the £500 limit and raise it either to £1,000 or £1,500. The Economic Secretary has put the case very fairly and very conscientiously. He is perfectly right in saying that the Government can give no undertaking about the introduction of an order to deal with the object of the Amendment—and it is important for the House to differentiate between the question of altering the Bill as it stands and accepting the Amendment. The second point was in connection of an introduction of an order altering Purchase Tax, and the third was the question whether the Craft Centre of Great Britain could deal with this matter through, for example, its Pottery Advisory Committee.
Those are the three variants. The answer to the first is that we are unable to alter the Bill; to the second, that it would be wrong—as explained by the Economic Secretary—to give hope of an order being introduced; and to the third, that it has not yet been decided whether it will be possible to do something, through the Pottery Advisory Committee, under the assistance-to-craftsmen scheme. I had hoped to have a definite answer to that question before the Report stage, because I anticipated that this would be a subject in which hon. Members would take an interest.
Perhaps hon. Members will appreciate that this scheme was of particular interest to the late Sir Stafford Cripps. Some

Division No. 76.]
AYES
17.30 p.m.


Ainsley, J. W.
Carmichael, J.
Evans, Edward (Lowestoft)


Albu, A. H.
Champion, A. J.
Fernyhough, E.


Allen, Arthur (Bosworth)
Chapman, W. D.
Fletcher, Eric


Allen, Scholefield (Crewe)
Chetwynd, G. R.
Forman, J. C.


Bacon, Mist Alice
Clunie, J.
Fraser, Thomas (Hamilton)


Bartley, P.
Coldrick, W.
Gaitskell, Rt. Hon. H. T. N


Bellenger, Rt. Hon. F. J.
Collick, P. H. (Birkenhead)
Gibson, C. W.


Benn, Hn, Wedgwood (Bristol, S.E.)
Collins, V.J. (Shoreditch &amp; Flnsbury)
Greenwood, Anthony


Benson, G.
Corbet, Mrs. Freda
Grey, C. F.


Beswick, F.
Cove, W. G.
Griffiths, David (Rother Valley)


Bevan, Rt. Hon. A. (Ebbw Vale)
Craddock, George (Bradford, S.)
Griffiths, William (Exchange)


Blackburn, F.
Cronin, J. D.
Hale, Leslie


Blenkinsop, A.
Daines, P.
Hall, Rt. Hn. Glenvil (Colne Valley)


Blyton, W. R.
Dalton, Rt. Hon. H.
Hamilton, W. W.


Bowden, H. W. (Leicester, S.W.)
Darling, George (Hillsborough)
Hastings, S.


Bowen, E. R. (Cardigan)
Davies, Stephen (Merthyr)
Henderson, Rt. Hn. A. (Rwly Regis)


Boyd, T. C.
Deer, G.
Herbison, Miss M.


Braddock, Mrs. Elizabeth
Delargy, H. J.
Holman, P.


Brockway, A. F.
Dodds, N. N.
Hubbard, T. F.


Broughton, Dr. A. D. D.
Dugdale, Rt. Hn. John (W. Brmwch)
Hughes, Emrys (S. Ayrshire)


Burke, W. A.
Ede, Rt. Hon. J. C.
Hughes, Hector (Aberdeen, N.)


Butler, Herbert (Hackney, C.)
Edwards, Rt. Hon. John (Brighouse)
Hunter, A. E.


Butler, Mrs. Joyce (Wood Green)
Edwards, W. J. (Stepney)
Hynd, H, (Accrington)

Members may not realise how it works. If a scheme is worked out it means that under the assistance-to-craftsmen scheme variable relief from Purchase Tax is granted upon various objects.

The difficulties which I envisaged during the Committee stage, in the speech to which the hon. Member for Rossendale referred, have not yet been resolved, for exactly the reasons which I gave then and which he repeated this afternoon. It is not impossible that those difficulties will be resolved, but that is the only hope I see of helping the craft potter at present. In making up their minds upon this matter, hon. Members opposite must realise that it is not now possible for the Government to alter the Bill, and that they must not count upon the introduction of an order, at any rate, so far as I can see.

If we can, however, through the aid of the Pottery Advisory Committee and the Craft Centre, find a scheme, under the assistance-to-craftsmen scheme, my right hon. Friend the President of the Board of Trade will give it every consideration. If it were accepted it would be followed by a suitable adjustment of Purchase Tax following upon the scheme invented under this method, which was dear to the heart of one of my predecessors. That is the position. I have tried to give as careful an answer to this difficult question as the House would desire.

Question put, That those words be there inserted in the Bill:—

The House divided: Ayes 160, Noes 202.

Irvine, A. J. (Edge Hill)
Owen, W. J.
Strauss, Rt. Hon. George (Vauxhall)


Irving, S. (Dartford)
Padley, W. E.
Summerskill, Rt. Hon. E.


Jay, Rt. Hon. D. P. T.
Paling, Will T. (Dewsbury)
Sylvester, G. O.


Jeger, George (Goole)
Palmer, A. M. F.
Taylor, Bernard (Mansfield)


Jeger, Mrs. Lena(Holbn &amp; St. Pncs, 8.)
Pannell, Charles (Leeds, W.)
Taylor, John (West Lothian)


Johnson, James (Rugby)
Parker, J.
Thomas, Iorwerth (Rhondda, W.)


Jones, Rt. Hon. A. Creech (Wakefield)
Parkin, B. T.
Thomson, George (Dundee, E.)


Jones, Elwyn (W. Ham, S.)
Pearson, A.
Tomney, P.


Jones, Jack (Rotherham)
Popplewell, E.
Turner-Samuels, M.


Kenyon, C.
Price, J. T. (Westhoughton)
Ungoed-Thomas, Sir Lynn


Key, Rt. Hon. C. W.
Price, Philips (Gloucestershire, w.)
Viant, S. P.


King, Dr. H. M.
Proctor, W. T.
Wade, D. W.


Lawson, G. M.
Rankin, John
Warbey, W. N.


Ledger, R. J.
Reeves, J.
Weitzman, D.


Lee, Frederick (Newton)
Reid, William
Wells, Percy (Faversham)


Lee, Miss Jennie (Cannook)
Rhodes, H.
Wells, William (Walsall, N.)


MacColl, J. E.
Robens, Rt. Hon. A.
Wheeldon, W. E.


McKay, John (Wallsend)
Roberts, Albert (Normanton)
White, Henry (Derbyshire, N. E.)


McLeavy, Frank

Wilkins, W. A.


MacPherson, Malcolm (Stirling)
Robinson, Kenneth (St. Pancras, N.)
Willey, Frederick


Mahon, S.
Ross, William
Williams, David (Neath)


Marquand, Rt. Hon. H. A,
Royle, C.
Williams, Rev. Llywelyn (Abertillery)


Mason, Roy
Short, E. W.
Williams, W. R. (Openshaw)


Messer, Sir F.
Silverman, Julius (Aston)
Williams, W. T. (Barons Court)


Mitchison, G. R.
Silverman, Sydney (Nelson)
Willis, Eustace (Edinburgh, E.)


Monslow, W.
Simmons, C. J. (Brierley Hill)
Wilson, Rt. Hon. Harold (Huyton)


Morrison, Rt. Hn. Herbert (Lewis'm, S.)
Skeffington, A. M.
Woodburn, Rt. Hon. A.


Moyle, A.
Slater, Mrs. H. (Stoke, N.)
Yates, V. (Ladywood)


Neal, Harold (Bolsover)
Slater, J. (Sedgefield)



Oram, A. E.
Sorensen, R. W.
TELLERS FOR THE AYES:


Orbach, M.
Sparks, J. A.
Mr. Holmes and


Oswald, T.
Steele, T.
Mr. G. H. R. Rogers.




NOES


Agnew, Cmdr. p. G.
Cunningham, Knox
Hurd, A. R.


Aitken, W. T.
Currie, G. B. H.
Hutchison, Sir Ian Clark (E'b'gh, W.)


Allan, R. A. (Paddington, S.)
Dance, J. C. G,
Hyde, Montgomery


Alport, C. J. M.
D'Avigdor-Goldsmid, Sir Henry
Hylton-Foster, Sir H. B. H.


Amery, Julian (Preston, N.)
Deedes, W. F.
Iremonger, T. L.


Amory, Rt. Hn. Heathcoat (Tiverton)
Digby, Simon Wingfield
Irvine, Bryant Godman (Rye)


Anstruther-Gray, Major W. J.
Donaldson, Cmdr. C. E. MCA.
Jenkins, Robert (Dulwich)


Arbuthnot, John
Doughty, C. J. A.
Jennings, J. C. (Burton)


Armstrong, C. W.
Duncan, Capt. J. A. L.
Johnson, Dr. Donald (Carlisle)


Ashton, H.
Emmet, Hon. Mrs. Evelyn
Johnson, Eric (Blackley)


Atkins, H. E.
Errington, Sir Eric
Jones, A. (Hail Green)


Baldwin, A. E.
Farey-Jones, F. W.
Keegan, D.


Balniel, Lord
Fell, A.
Kerby, Captain H. B.


Barber, Anthony
Finlay, Graeme
Kerr, H. W.


Barlow, Sir John
Fisher, Nigel
Kershaw, J. A.


Barter, John
Fort, R.
Kirk, P. M.


Baxter, Sir Beverley
Fraser, Hon. Hugh (Stone)
Lagden, G. W.


Bell, Ronald (Bucks, 8.)
Freeth, D. K.
Lambert, Hon. G.


Bevins, J. R. (Toxteth)
George, J. C. (Pollok)
Lancaster, Col. C. C.


Bidgood, J. C.
Glover, D.
Leavey, J. A.


Biggs-Davison, J. A.
Godber, J. B.
Leburn, W. G.


Birch, Rt. Hon. Nigel
Gomme-Duncan, Col. A.
Legh, Hon. Peter (Petersfield)


Bishop, F. P.
Gower, H. R.
Lindsay, Hon. James (Devon. N.)


Body, R. F.
Graham, Sir Fergus
Lindsay, Martin (Solihull)


Boothby, Sir Robert
Grant-Ferris, Wg.Cdr. R. (Nantwich)
Lloyd, Rt. Hon. Selwyn (Wirral)


Bossom, Sir A. C.
Green, A.
Longden, Gilbert


Boyle, Sir Edward
Crosvenor, Lt.-Col. R. G.
Lucas, Sir Jocelyn (Portsmouth, S.)


Braithwaite, Sir Albert (Harrow, W.)
Hall, John (Wycombe)
Lucas-Tooth, Sir Hugh


Brooke, Rt. Hon. Henry
Harris, Frederic (Croydon, N. W.)
McAdden, S. J.


Brooman-White, R. C.
Harris, Reader (Heston)
Macdonald, Sir Peter


Browne, J. Nixon (Craigton)
Harrison, Col. J. H. (Eye)
Mackie, J. H. (Calloway)


Buchan-Hepburn, Rt. Hon. P. G. T.
Harvey, Air Cdre. A. V. (Macclesfd)
McLaughlin, Mrs. P.


Burden, F. F. A.
Harvey, John (Walthamstow, E.)
Maclay, Rt, Hon. John


Butcher, Sir Herbert
Heald, Rt. Hon. Sir Lionel
Macleod, Rt. Hn. Iain (Enfield, W.)


Butler, Rt. Hn. R. A. (Saffron Walden)
Heath, Edward
Macpherson, Niall (Dumfries)


Campbell, Sir David
Hicks-Beach, Maj. W. W.
Maddan, Martin


Carr, Robert
Hill, John (S. Norfolk)
Maitland, Cdr. J. F. W. (Horncastle)


Cary, Sir Robert
Hirst, Geoffrey
Markham, Major Sir Frank


Chichester-Clark, R.
Holland-Martin, C. J.
Marlowe, A. A. H.


Cole, Norman
Hornsby-Smith, Miss M. P.
Marshall, Douglas


Cooper, Sqn. Ldr. Albert
Horsbrugh, Rt. Hon. Dame Florence
Mathew, R,


Cordeaux, Lt.-Col. J. K.
Howard, Gerald (Cambridgeshire)
Mawby, R. L.


Corfield, Capt. F. V.
Howard, Hon. Greville (St. Ives)
Maydon, Lt.-Comdr. S. L. C.


Craddock, Beresford (Spelthorne)
Howard, John (Test)
Medlicott, Sir Frank


Crookshank, Capt. Rt. Hn. H. F. C.
Hudson, Sir Austin (Lewisham, N.)
Monekton, Rt. Hon. Sir Walter


Crosthwaite-Eyre, Col. O. E.
Hughes Hallett, Vice-Admiral J.
Moore, Sir Thomas


Crouch, R. F.
Hughes-Young, M. H. C.
Nabarro, C. D. N.


Crowder, Sir John (Finchley)
Hulbert, Sir Norman
Nairn, D. L. S.

Neave, Airey
Remnant, Hon. P.
Thomas, P. J. M. (Conway)


Nicolson, Godfrey (Farnham)
Renton, D. L. M.
Thompson, Kenneth (Walton)


Nicolson, N. (B'n'm'th, E. &amp; Chr'ch)
Rodgers, John (Sevenoaks)
Thompson, Lt.-Cdr. R. (Croydon, S.)


Nield, Basil (Chester)
Roper, Sir Harold
Thornton-Kemsley, C, N.


Oakshott, H. D.
Ropner, Col. Sir Leonard
Touche, Sir Gordon


O'Neill, Hn. Phelim (Co. Antrim, N.)
Russell, R. S.
Vaughan-Morgan, J. K.


Ormsby-Gore, Hon. W. D.
Sharples, R. C.
Vickers, Miss J. H.


Orr, Capt. L. P. S
Simon, J. E. S. (Middlesbrough, w.)
Wakefield, Sir Wavell (St. M'lebone)


Osborne, C,
Smyth, Brig. J. C. (Norwood)
Ward, Hon. George (Worcester)


Page, R. G.
Spearman, A. C, M.
Ward, Dame Irene (Tynemouth)


Pannell, N. A. (Kirkdale)
Speir, R. M.
Williams, Paul (Sunderland, S.)


Partridge, E.
Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)
Williams, R. Dudley (Exeter)


Pilkington, Capt. R. A.
Stanley, Capt. Hon. Richard
Wills, G. (Bridgwater)


Pitman, I. J.
Stewart, Henderson (Fife, E.)
Wilson, Geoffrey (Truro)


Pitt, Miss E. M.
Stoddart-Scott, Col. M.
Wood, Hon. R.


Pott, H. P.
Storey, S.
Woollam, John Victor


Price, David (Eastleigh)
Stuart, Rt. Hon. James (Moray)
Yates, William (The Wrekin)


Price, Henry (Lewisham, W.)
Summers, G. S. (Aylesbury)



Raikes, Sir Victor
Sumner, W. D. M. (Orpington)
TELLERS FOR THE NOES:


Ramsden, J. E.
Thomas, Rt. Hn. J. P. L. (Hereford)
Mr. Redmayne and


Rawlinson, P. A. G.
Thomas, Leslie (Canterbury)
Sir Wavell Wakefield.

Mr. Gaitskell: I beg to move, to leave out "and (v)."
The Amendment seeks to exclude from the Purchase Tax of 30 per cent. which is now being imposed upon them coal or cinder sieves, and sifters. During the Committee proceedings, these important and useful articles were considered together with two other groups, pot scourers and steel wool, and pastryboards and rolling-pins. For some reason that I do not understand, during the debate on that occasion much more attention was paid to pot scourers and steel wool and even to pastryboards and rolling-pins, than to coal or cinder sifters.
It was for that reason and in the hope, this time realised, that you, Mr. Speaker, might therefore select it, that we put down the Amendment. The fact that on this occasion it is being considered on its own does not mean that we have changed our views about pot scourers and steel wool, or pastryboards and rolling-pins. But there are very special circumstances which apply in the case of coal or cinder sieves or sifters.
We are pleased that the Chancellor saw fit to make concessions, and to take out of the tax schedule altogether baskets, shopping bags, brushes, mops and brooms. His argument on that occasion was that those things were produced by blind persons—an argument which we all, naturally, appreciate—but whether or not coal and cinder sieves and sifters are produced by the blind there are equally strong arguments.
The argument is a very simple one. The Government must rightly be very much concerned with the coal situation. We are now importing a very large

amount of coal, costing about £80 million, a large part of which has to be paid for in dollars. It is not necessary for me to labour the immense importance to the country of fuel economy. When I was Minister of Fuel and Power I had the privilege of doing my best to encourage economy and of forwarding various schemes.
At that time we did, indeed, do our best, by propaganda, to encourage consumers to do this very business of sieving their cinders to save coal. An estimate has been made that the amount thereby saved is about three-quarters of a million tons a year. I cannot quote chapter and verse for that figure, but I believe that a Ministerial answer has confirmed it.
Since that is the case, one must ask how the Government can solemnly impose a 30 per cent. duty on the one article needed for this fuel economy. I do not know what the argument will be this time. If it is based on the saving of the metal involved, I would suggest that it is much more important to save the coal. Admittedly, we have to import some sheet steel, but the amount involved in these articles is obviously negligible in relation to the total demand. Nor do I think that the Economic Secretary is likely to press the point that a valuable export trade is being sacrificed for the lure of the home market, and that if only people would buy fewer coal and cinder sieves and sifters more of them would be exported.
I think that the hon. Gentleman will fall back on the long stop argument, as it might be termed, which, in the end, is always paraded by the Government, namely, that although the change in tax will not result in contraction of demand, nevertheless there will be a mopping up


of purchasing power, thus making it more difficult for the consumers, the housewives—or, indeed, as may be the case here, their husbands—to spend money on other things.
If he puts that forward, I would make two comments. First, the argument is really this, "We recognise that these articles are essentials, but we must tax them so that you, the consumers, will spend less on inessential articles and inflation will, to that extent, be controlled." I must point out that such an argument is the basis for a defence not only of a tax on coal sieves and sifters, but on any essential of life.
Indeed, the Economic Secretary could perfectly well defend a tax on food—and a very powerful argument that would be. Undoubtedly, if a tax were put on food, and more particularly on the most important articles of food for which the demand is inelastic people would buy as much as before, but would have less money to spend on other things. I do regard that argument, therefore, as a very dangerous one to use. I have wanted to say that for some time, but this has been my first opportunity.
My second comment is that, quite frankly, I am not so sure that in this case the demand is quite as inelastic as all that. I would not class coal and cinder sieves and sifters with dustbins for instance—or even with pot scourers and steel wool. The very prospect of sieving the cinders is an unattractive one and, in itself, is quite enough to put people off buying, but if there is added to that the further disadvantage that the prices of the sieves and sifters is to go up people may very well be discouraged from buying them and, as a consequence, less fuel will be saved.
7.45 p.m.
I must say, therefore, that the argument for the exemption of this small group of articles from Purchase Tax is a very powerful one indeed. Perhaps the Economic Secretary agrees with me. He obviously agrees with all my arguments, because he cannot do anything else—there is no possible answer to them. I hope that he does agree with me and that the Chancellor is willing to make a concession here. If he does agree with me, and I say it in all seriousness, I will very shortly

discontinue my speech in favour of exemption.
I appreciate the Chancellor is feeling—it is evident in all his speeches—that if he gives way on one thing there will be repercussions. That is the familiar Treasury argument. It has been advanced from that bench year in and year out for as long as anyone can remember. In practice, it is not an argument that can be allowed to remain unassailed. Exceptions are always made in every law. There are still a great many articles which, thank goodness, do not attract Purchase Tax. It is quite true that if the present Government remain in office much longer the list will become smaller and smaller, but all of us hope that that will not be the case and that they will not stay there very much longer.
We have had exceptions made on brushes and brooms, on shopping baskets and shopping bags for particular reasons. I submit that there are overwhelming reasons for an exception to be made here. It is very much in the national interest that the maximum degree of fuel economy should be practised, and it is a decidedly foolish, and, indeed, a completely misconceived idea, to tax the very articles people must buy in order to save fuel.

Mr. Blenkinsop: It is important that one further point should be raised. We have discussed ad infinitum the problem of the Government's trying to mop up purchasing power, but I do not think that it is fully appreciated that not only are we suffering from this imposition of a 30 per cent. tax on this range of articles—and, of course, all the others that we have discussed earlier—but that manufacturers are taking the opportunity afforded by changes to make further additions to their prices.
There is a good deal of evidence to show that, not only in this specific case of cinder sifters but in the case of other articles which we cannot now discuss, the manufacturers are taking this opportunity to add various other cumulative changes and price increases which they have been holding back for some time. I have with me a number of comments from various firms in different trades making this very point. That, surely, is as true in this range as in others.

Mr. Cyril Osborne: Has the hon. Member any evidence of that?

Mr. Blenkinsop: I have evidence here, which I shall be very glad to send to the Economic Secretary, of the way in which firms are generally—and very naturally—adding further increases of their own to the Purchase Tax increase of 30 per cent. There is, first of all, what they call the rounding-out charge. I notice that that always operates so that they add a little extra; it should really be called a rounding-up charge. If there is an odd halfpenny or farthing here or there, when a Purchase Tax addition of this kind is imposed the list prices are raised to a round figure to give a little extra margin.

Mr. Osborne: The hon. Gentleman has only examples where the price has been put up. He does not know exactly what has happened in all trades, and I should like to hazard that in some cases the margins have gone down.

Mr. Blenkinsop: I have not had an opportunity of investigating all trades. I hope that hon. Members may give their experiences in these matters, but I have described precisely what happens. Customers are not only being required to pay the increase being imposed by the Government; they are being required to pay what I call the rounding-up charge to bring this sum to an even figure.
In addition, the firms concerned claim that they have held back various increases over a long period, and they take advantage of this opportunity, as they say, to make matter easier for the retailer by imposing those increases now. They say that retailers do not like continually varying prices. They say that various increases have been held back for some months and that they are taking advantage of this Purchase Tax imposition to bring those other increases into force at the same time.
I believe that in imposing this and similar charges the Government are encouraging manufacturers to bring into force further increases which, had it not been for the Government's initiative, they might have held back. The Chancellor said at one time that he hoped manufacturers would reduce prices wherever possible, and I believe that a member of the Government—possibly I am doing the Chancellor an injustice—suggested that it might be wise on some occasions to reduce prices rather than to increase dividends. That seemed a little strange

coming from the Treasury Bench at present but some sort of statement of that kind was once made.
In fact, the reverse is happening here. Under the positive encouragement of the Government, manufacturers in these commodities and others are seizing the opportunity to increase prices far more than the Government's 30 per cent. imposition would require. People who have to buy these household commodities well know that to be the case. My right hon. Friend rightly said that these are household articles which everyone has to buy. It is common knowledge that they are having to pay bigger prices than those required by the 30 per cent. imposition.
We have the fantastic position, as many housewives can prove to be the case, that when we go into a shop at present we find that as long as some stocks remain, which have been purchased at pre-Purchase Tax level, they are in some cases being sold at the lower prices; but as the newer stocks come in, they have to be sold at higher prices, and we often find smaller-sized articles costing a good deal more than larger-sized articles of the same kind. Anomalies of this kind have been introduced by the Purchase Tax. Housewives are faced with this absurdity: articles which they know to be more expensive are available, for a time, and as long as stocks remain, at a lower price than articles which ought to be cheaper.
These anomalies add to the annoyance and bitterness of people doing their daily shopping. Absurd impositions of this kind appear wholly irrational to the ordinary housewife and, indeed, to us, because we see no rhyme or reason in them. They operate in such a way that no valid argument can be made for them, and that must create a great deal of ill-feeling among the general public and a determination to try to put the matter right in the only way open to them—by a new and intensified claim for wage advances.
In insisting upon taxes of this kind, the Treasury Bench are bringing down upon themselves the sort of contempt which Governments earned in the past when they tried to impose taxes on window space. I hope these taxes can be swept away as rapidly as was the window tax, although we see evidence all over the country of the effect of the window tax.


I believe that the Government will earn much contempt from the general public for insisting upon taxes of this nature.

Mr. Turner-Samuels: I feel called upon most firmly to support the Amendment in order to get rid of this fiddling, finicking farce in which the Government are indulging by imposing this tax upon coal sieves and cinder sifters.
I see that the hon. Member for Louth (Mr. Osborne) has evaporated from the Chamber. He is well upon his journey, because it is not possible to look upon him except as an innocent abroad. He was prepared, as the House saw, to challenge the statement made from this side of the House that by imposing a tax of this character upon these goods, which are essential in the kitchen, in the scullery and in the home, the Government were encouraging the trader to get a little more for himself as well, no doubt using the Budget as the excuse for the increase in price. To the addition made by the Budget, the trader will, as usual, add a little more for his own profit.
To the utter astonishment of myself, and I should think to the dubiety of the whole House, the hon. Member for Louth rose to assail that view. The Treasury Bench well know, and I do not suppose a single person who goes into a shop has not experienced it, that as soon as a tax of this character is imposed, the increase in price of the article is more than the measure of the tax; there is always a further addition. The Treasury Bench must have had experience of that fact for years. And with some reason. It requires much more money for the trader to purchase these articles. He has an increased capital expenditure to meet as a result of further taxation. In those circumstances, the trader not unnaturally wants to secure a profit on the extra outlay in which he is involved by adding to the price a sum which will protect him in that way.
The taxpayer and the purchaser is therefore hit twice; he is hit by the Exchequer, because the Government impose this miserable and unwarrantable tax, and he is hit by the trader, who is subjected to this nuisance and complication in his business, which is already sufficiently complicated. The public has, therefore, to meet this double, extra burden. Everyone in the country except

the hon. Member for Louth knows that it is a common practice that when one goes into a shop for any of the articles which are the subject matter of this fiddling, farcical impost put upon them by the Budget, one will be given the excuse that the reason for the price is the Budget.
One almost trembles with awe at the very names of these spectacular articles, coal sieves and cinder sifters. We are told that they are being used for getting rid of inflation. Their very potency is, it appears, so great that the Government believe they will really result in disinflation. This is the nonsense put over from the Treasury Bench in order to justify rejection out of hand of this most desirable Amendment. Of course anyone knows that there is no effect on disinflation in this impost at all. As a matter of fact the effect is the very reverse. The economic effect will be to add to inflation and not diminish it at all. This tax on coal sieves and cinder sifters is nothing more nor less than pillaging the public, and the Treasury Bench knows it.
8.0 p.m.
These articles are necessities. They are goods which the housewife requires continually, regularly, and she has to renew them periodically. She could not carry on the work of her home hygienically, domestically or practically unless she had these articles. The Government, knowing that, and knowing the constancy with which they are bought and the volume of the goods involved, have deliberately put this tax on these household goods used daily by housewives as a discriminating tax in order that they may collect toll from that most worthy section of society.
I ask the Economic Secretary to the Treasury to remember that in making the public pay this tax on coal sieves and cinder sifters in this way he is materially raising the cost of living. These two articles are only symbolical. They are representative of all the other articles the Chancellor of the Exchequer is imposing taxation on in this Finance Bill. I cannot go into the other matters of course, Mr. Deputy-Speaker, or I should be out of order. No doubt I have been very near being out of order on several occasions so far—

Mr. Deputy-Speaker (Sir Rhys Hopkin Morris): The hon. and learned Member has.

Mr. Turner-Samuels: But these two matters are, as I say, merely symbolical. It is not a question of the Government—

Mr. Gaitskell: Is my hon. and learned Friend really saying that these articles are only symbolical? Has he ever done any sifting?

Mr. Deputy-Speaker: I must remind the hon. and learned Member that symbolism does not arise on this Amendment.

Mr. Turner-Samuels: My right hon. Friend has not sifted this question enough. I was not referring to these articles as being symbols and not being practical, but as being representative of all the other things on which tax is being charged in exactly the same way. If the Economic Secretary has not already gripped the fact that these and other imposts, will, because of the cost of living, lead to a rise in wage demands, he does not know the first elementary rule about the law of economics. It will happen, inevitably. It must happen, and the Government have fallen so low in these financial matters that they do not care whether it happens or not.

Sir E. Boyle: The description given by the hon. and learned Member for Gloucester (Mr. Turner-Samuels) to cinder sifters as symbolical rather reminded me of the time when as a schoolboy I was dining with the Provost of Eton. Someone made a flippant remark about angel's wings and professed doubt about them. The Provost said, "You deceive yourself. Angel's wings are purely allegorical."
I have listened to a great many of the speeches we have had in these debates, and I must admit, although I could not entirely agree with it, that none of the speeches to which I have listened gave the House more pleasure than that of the right hon. Member for Leeds, South (Mr. Gaitskell), in opening this discussion. If this had been an American debate competition I think the right hon. Member would have scored high marks on all the categories. The four categories as I remember them are: material, order, posture, and cleanliness.
The right hon. Member referred to the view which I have expressed several times in these debates that by extending the Purchase Tax over a wide range of goods, even if we do not directly affect the demand for those goods by increasing the tax, there will as a result be less purchasing power available for other things. As I understood him, the right hon. Member made two objections to that view. First, he asked how widely are we to apply that doctrine? I would only say to him on the general point that I do not believe the right hon. Member really disagrees with the Government in his heart in their policy of trying to hold down the level of consumer demand in order to leave as much room as possible in the economy for investment. I do not believe he really disagrees with that and I do not believe a number of his hon. Friends disagree, either.
I believe that the disagreement between us is on two rather different points. I will not spend long on this Mr. Deputy-Speaker, but I would like to state what are, I believe, our real points of disagreement. First, the right hon. Member does not believe that we can carry out this policy in the climate of a free economy and, secondly, if the right hon. Member were carrying out this policy—shall I put it this way—he would adhere more rigorously to progressive principles than we have done. I grant him those two differences, but I have no doubt that there is not quite as much difference between us on some of the main lines of the Budget policies of my right hon. Friend as one might think.

Mr. Deputy-Speaker: I am very interested in the argument, but I do not think it is relevant to the Amendment.

Mr. Gaitskell: I entirely agree, Mr. Deputy-Speaker. I know that you are very interested and will be interested to hear my comment on what the hon. Gentleman has said. I would point out to him that there is all the difference in the world between the view of the Government of how to restrict consumer demand at the expense of people who are too poor to bear the extra burden, and our view that if consumer demand has to be restricted because it was artificially expanded in the April Budget, it should be restricted by cutting down the purchasing power of those who can afford to carry the burden.

Mr. Deputy-Speaker: Now can we come back to the Amendment?

Sir E. Boyle: If I might be permitted to answer the right hon. Member in one sentence, Mr. Deputy Speaker, I promise that I will then proceed directly to cinder sifters. I would only say what I said on the Second Reading of the Bill, which true. I do not believe there is any evidence that the April Budget has had a substantial effect on the level of consumer demand.
Coming to the second argument of the right hon. Member—which was a serious point and interested me very much—he said that here we have something for which the demand may well be elastic. That is to say, as a result of the price of sieves and cinder sifters, people may buy fewer of them. The right hon. Member may be right about that. I have taken such advice as I can on this question and the estimate given to me is that that is unlikely to be so to any great degree. I will give the right hon. Member this assurance. As he has raised the question tonight, I will make it my personal responsibility to watch this matter as far as I am able. I will make a special point of trying to see—

Mr. Gaitskell: Can we have the hon. Gentleman's assurance that if it proves that there is any reduction in the demand

Division No. 77.]
AYES
[8.13 p.m.


Agnew, Cmdr. P. G.
Butcher, Sir Herbert
Freeth, D. K.


Aitken, W. T.
Butler, Rt. Hn. R. A. (Saffron Walden)
George, J. C. (Pollok)


Allan, R. A. (Paddington, S.)
Campbell, Sir David
Clover, D.


Alport, C. J. M.
Carr, Robert
Godber, J. B.


Amery, Julian (Preston, N.)
Cary, Sir Robert
Gomme-Duncan, Col. A.


Amory, Rt. Hn. Heathcoat (Tiverton)
Chichester-Clark, R.
Cower, H. R.


Anstruther-Gray, Major W. J.
Cole, Norman
Graham, Sir Fergus


Arbuthnot, John
Cordeaux, Lt.-Col. J. K.
Grant-Ferris, Wg Cdr. R. (Nantwich)


Armstrong, C. W.
Corfield, Capt. F. V.
Green, A.


Ashton, H.
Craddock, Beresford (Spelthorne)
Grosvenor, Col. R. G.


Astor, Hon. J. J.
Crookshank, Capt. Rt. Hn. H. F. C.
Hall, John (Wycombe)


Atkins, H. E.
Crosthwaite-Eyre, Col. O. E.
Harris, Frederic (Croydon, N. W.)


Baldwin, A. E.
Crouch, R. F.
Harris, Reader (Heston)


Balniel, Lord
Crowder, Sir John (Finchley)
Harrison, Col. J. H. (Eye)


Barlow, Sir John
Cunningham, Knox
Harvey, Air Cdre. A. V. (Macclesfd)


Barter, John
Currie, G. B. H.
Harvey, John (Walthamstow, E.)


Baxter, Sir Beverley
Dance, J. C. G.
Heald, Rt. Hon. Sir Lionel


Bell, Ronald (Bucks, S.)
D'Avigdor-Goldsmid, Sir Henry
Heath, Edward


Bevins, J. R. (Toxteth)
Deedes, W. F.
Hicks-Beach, Maj. W. W.


Bidgood, J. C.
Digby, Simon Wingfield
Hill, John (S. Norfolk)


Biggs-Davison, J. A.
Dodds-Parker, A. D.
Hirst, Geoffrey


Birch, Rt. Hon. Nigel
Doughty, C. J. A.
Holland-Martin, C. J.


Bishop, F. P.
Duncan, Capt. J. A. L.
Hornsby-Smith, Miss M. P.


Body, R. F.
Emmet, Hon. Mrs. Evelyn
Horsbrugh, Rt. Hon. Dame Florence


Boothby, Sir Robert
Errington, Sir Eric
Howard, Gerald (Cambridgeshire)


Bossom, Sir A. C.
Erroll, F. J.
Howard, Hon. Greville (St, Ives)


Boyle, Sir Edward
Farey-Jones, F. W.
Howard, John (Test)


Braithwaite, Sir Albert (Harrow, W.)
Fell, A.
Hudson, Sir Austin (Lewisham, N.)


Brooke, Rt. Hon. Henry
Finlay, Graeme
Hughes Hallett, Vice-Admiral J.


Browne, J. Nixon (Craigton)
Fisher, Nigel
Hughes-Young, M. H. C.


Buchan-Hepburn, Rt. Hon. P. G. T.
Fort, R.
Hulbert, Sir Norman


Burden, F. F. A.
Fraser, Hon. Hugh (Stone)
Hurd, A. R.

for cinder sieves and sifters, the Government will come forward with an Order to remove the Purchase Tax from them?

Sir E. Boyle: I was going on to say that I can enter into no commitment about that. What I will do is to take a special personal interest in the facts.
As the right hon. Member for Leeds, South says, it is always difficult to decide exactly where the line should be drawn. If one makes a concession, it is extremely difficult to limit it to one item and not to bring in a number of similar goods. For that reason, I cannot advise the House to accept the Amendment.
I share the right hon. Gentleman's regret that the last time we discussed the question, such a disproportionate amount of time was spent on pot scourers and the like, for I think that this is the most serious group affected in the collection of articles that we discussed in Committee. I cannot advise the House to accept the Amendment, but I will take careful note of the points that the right hon. Gentleman has raised, and I thank him very much for the spirit in which he moved the Amendment.

Question put, That "and (v)" stand part of the Bill:—

The House divided: Ayes 202, Noes 153.

Hutchison, Sir Ian Clark (E'b'gh, W.)
Markham, Major Sir Frank
Russell, R. S.


Hyde, Montgomery
Marlowe, A. A. H.
Sharples, R. C.


Hylton-Foster, Sir H. B. H.
Marples, A. E.
Simon, J. E. S. (Middlesbrough, W.)


Iremonger, T. L.
Marshall, Douglas
Smyth, Brig. J. G. (Norwood)


Irvine, Bryant Godman (Rye)
Matthew, R.
Spearman, A. C. M.


Jenkins, Robert (Dulwich)
Mawby, R. L.
Speir, R. M.


Jennings, J. C. (Burton)
Maydon, Lt.-Comdr, S. L. C.
Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)


Johnson, Dr. Donald (Carlisle)
Moore, Sir Thomas
Stanley, Capt. Hon. Richard


Johnson, Eric (Blackley)
Nabarro, G. D. N.
Stewart, Henderson (Fife, E.)


Jones, A. (Hall Green)
Nairn, D. L. S.
Stoddart-Scott, Col. M.


Keegan, D.
Neave, Airey
Storey, S.


Kerby, Capt. H. B.
Nicholson, Godfrey (Farnham)
Summers, G. S. (Aylesbury)


Kerr, H. W.
Nicolson, N. (B'n'm'th, E. &amp; Chr'ch)
Sumner, W. D. M. (Orpington)


Kershaw, J. A.
Nield, Basil (Chester)
Thomas, Leslie (Canterbury)


Kirk, P. M.
Oakshott, H. D.
Thomas, P. J. M. (Conway)


Lagden, G. W.
O'Neill, Hn. Phelim (Co. Antrim, N.)
Thompson, Kenneth (Walton)


Lambert, Hon. G.
Orr, Capt. L. P. S.
Thompson, Lt.-Cdr. R. (Croydon, S.)


Lancaster, Col. C. G.
Orr-Ewing, Charles Ian (Hendon, N.)
Thornton- Kemsley, C. N.


Leavey, J. A.
Osborne, C.
Touche, Sir Gordon


Leburn, W. G.
Page, R. G.
Vaughan-Morgan, J. K.


Legh, Hon. Peter (Petersfield)
Pannell, N. A. (Kirkdale)
Vickers, Miss J. H.


Lindsay, Hon. James (Devon, N.)
Partridge, E.
Vosper, D. F.


Lindsay, Martin (Solihull)




Lloyd, Rt. Hon. Selwyn (Wirral)
Pilkington, Capt. R. A.
Wakefield, Edward (Derbyshire, W.)


Longden, Gilbert
Pitman, I. J.
Wakefield, Sir Wavell (St. M'lebone)


Lucas, Sir Jocelyn (Portsmouth, S.)
Pitt, Miss E. M.
Ward, Hon. George (Worcester)


Lucas-Tooth, Sir Hugh
Pott, H. P.
Ward, Dame Irene (Tynemouth)


McAdden, S. J.
Price, David (Eastleigh)
Webbe, Sir H.


Macdonald, Sir Peter
Price, Henry (Lewisham, W.)
Williams, Paul (Sunderland, S.)


Mackie, J. H. (Galloway)
Raikes, Sir Victor
Williams, R. Dudley (Exeter)


McLaughlin, Mrs. P.
Ramsden, J. E.
Wilson, Geoffrey (Truro)


Maclay, Rt. Hon. John
Rawlinson, P. A. G.
Wood, Hon. R.


Macleod, Rt. Hn. Iain (Enfield, W.)
Redmayne, M.
Woollam, John Victor


Macpherson, Niall (Dumfries)
Remnant, Hon. P.
Yates, William (The Wrekin)


Maddan, Martin
Ronton, D. L. M.



Maitland, Cdr. J. F. W. (Horncastle)
Roper, Sir Harold
TELLERS FOR THE AYES:


Maitland, Hon. Patrick (Lanark)
Ropner, Col. Sir Leonard
Mr. Wills and Mr. Barber.




NOES


Ainsley, J. W.
Ede, Rt. Hon. J. C.
MacColl, J. E.


Albu, A. H.
Edwards, Rt. Hon. John (Brighouse)
McKay, John (Wallsend)


Allen, Scholefield (Crewe)
Edwards, W. J. (Stepney)
McLeavy, Frank


Bacon, Miss Alice
Evans, Edward (Lowestoft)
MacPherson, Malcolm (Stirling)


Bartley, P.
Fletcher, Eric
Mahon, S.


Bellenger, Rt. Hon. F. J.
Forman, J. C.
Marquand, Rt. Hon. H. A.


Benn, Hn. Wedgwood (Bristol, S. E.)
Fraser, Thomas (Hamilton)
Mason, Roy


Benson, G.
Gaitskell, Rt. Hon. H. T. N.
Messer, Sir F.


Beswick, F.
Gibson, C. W.
Mitchison, G. R.


Blackburn, F.
Gordon Walker, Rt. Hon. P. C.
Monslow, W.


Blenkinsop, A.
Greenwood, Anthony
Moyle, A.


Blyton, W. R.
Grey, C. F.
Neal, Harold (Bolsover)


Bowden, H. W. (Leicester, S. W.)
Griffiths, David (Rother Valley)
Oram, A. E.


Bowen, E. R. (Cardigan)
Griffiths, William (Exchange)
Orbach, M.


Boyd. T. C.
Hale, Leslie
Oswald, T.


Braddock, Mrs. Elizabeth
Hall, Rt. Hn. Glenvil (Colne Valley)
Owen, W. J.


Brockway, A. F.
Hamilton, W. W.
Padley, W. E.


Broughton, Dr. A. D. D.
Hastings, S.
Palmer, A. M. F.


Burke, W. A.
Herbison, Miss M.
Pannell, Charles (Leeds, W.)


Butler, Herbert (Hackney, C.)
Holman, P.
Parker, J.


Butler, Mrs. Joyce (Wood Green)
Hubbard, T. F.
Parkin, B. T.


Callaghan, L. J.
Hughes, Emrys (S. Ayrshire)
Pearson, A.


Carmichael, J.
Hughes, Hector (Aberdeen, N.)
Popplewell, E.


Castle, Mrs. B. A.
Hunter, A. E.
Price, J. T. (Westhoughton)


Champion, A. J.
Hynd, H. (Accrington)
Price, Philips (Gloucestershire, W.)


Chapman, W. D.
Irvine, A. J. (Edge Hill)
Proctor, W. T.


Chetwynd, G. R.
Irving, S. (Dartford)
Rankin, John


Clunie, J.
Jay, Rt. Hon. D. P. T.
Reeves, J.


Coldrick, W.
Jeger, George (Goole)
Reid, William


Collick, P. H. (Birkenhead)
Jeger, Mrs. Lena (Holbn &amp; St.Pncs, S)
Rhodes, H.


Collins, V. J. (Shoreditch &amp; Finsbury)
Jenkins, Roy (Stechford)
Robens, Rt. Hon. A.


Corbet, Mrs. Freda
Johnson, James (Rugby)
Roberts, Albert (Normanton)


Cove, W. G.
Jones, Rt. Hon. A. Creech (Wakefield)
Rogers, George (Kensington, N.)


Craddock, George (Bradford, S.)
Jones, David (The Hartlepools)
Ross, William


Cronin, J. D.
Jones, Elwyn (W. Ham, S.)
Royle, C.


Daines, P.
Jones, Jack (Rotherham)
Short, E. W.


Dalton, Rt. Hon. H.
Kenyon, C.
Silverman, Julius (Aston)


Darling, George (Hillsborough)
Key, Rt. Hon. C. W.
Simmons, C. J. (Brierley Hill)


Davies, Stephen (Merthyr)
King, Dr. H. M.
Skeffington, A. M.


Deer, G.
Lawson, G. M.
Slater, Mrs. H. (Stoke, N.)


Delargy, H. J.
Ledger, R. J.
Slater, J. (Sedgefield)


Dodds, N. N.
Lee, Frederick (Newton)
Sorensen, R. W.


Dugdale, Rt. Hn. John (W. Brmwch)
Lipton, Lt.-Col. M.
Sparks, J. A.

Steele, T.
Wade, D. W.
Williams, Rev. Llywelyn (Ab'tillery)


Summerskill, Rt. Hon. E.
Warbey, W. N.
Williams, W. R. (Openshaw)


Sylvester, G. O.
Wells, Percy (Faversham)
Williams, W. T. (Barons Court)


Taylor, Bernard (Mansfield)
Wells, William (Walsall, N.)
Willis, E. G. (Edinburgh, E.)


Thomas, Iorwerth (Rhondda, W.)
Wheeldon, W. E.
Wilson, Rt. Hon. Harold (Huyton)


Thomson, George (Dundee, E.)
White, Henry (Derbyshire, N. E.)
Yates, V. (Ladywood)


Turner-Samuels, M.
Wilkins, W. A.



Ungoed-Thomas, Sir Lynn
Willey, Frederick
TELLERS FOR THE NOES:


Viant, S. P.
Williams, David (Neath)
Mr. Holmes and Mr. A. Allen.

Mr. H. Brooke: I beg to move, in page 11, line 14, at the end to insert:
Provided that the omission of the said paragraph (j) exempting household brushes, brooms and mops shall have effect only as respects the period ending with the first day of December, nineteen hundred and fifty-five.
The purpose of the Amendment will, I trust, be acceptable to the House. About a fortnight ago I had the uncongenial duty of resisting an Amendment on this subject which was eloquently supported, among others, by my hon. Friends the Members for Surbiton (Mr. Fisher) and for Belfast, West (Mrs. McLaughlin). My hon. Friend the Member for Surbiton on that occasion, as one of his arguments, said that there was no question of buying brooms and brushes "just to keep up with the Joneses," and my hon. Friend the Member for Belfast, West insisted that the acceptance of the Amendment would be extremely popular. I trust, therefore, that popularity will now extend to the Government.
A day or two after that the Chancellor of the Exchequer answered a number of questions put to him about brooms and brushes and said that he would be very ready to examine any facts placed before him. He said that he felt great difficulty over one aspect of the tax on brooms and brushes, and that that was that a considerable number of blind and disabled people were employed in making brooms and brushes. He pointed out, also, that there were substantial problems of definition which would have to be tackled if the tax were to remain.
He gave the matter very careful and fresh examination. I stress that it was fresh examination, because brooms and brushes had not been taxed before. Therefore, this was a case of a tax being imposed without conversations with the trade in examination of the implications of the tax. As hon. and right hon. Members will appreciate, it is both impossible and improper to go to an industry and say, in advance of a Budget, "I think I will tax you. I want to examine with you how the tax will work." However,

discussions took place after the Budget speech had been made.
As a result of the debate in Committee on the Bill, and after further examination of the tax, my right hon. Friend came to the conclusion that the case was made in respect of the number of blind and disabled people employed in this industry, just as he had reached the decision that the case was made in respect of shopping baskets, which he relieved from tax during the Committee. In those circumstances, he felt that the right thing to do to minimise the period of uncertainty was to put down an Amendment on the Notice Paper at the earliest possible moment, and he put down this Amendment, to terminate the tax at midnight on 1st December.
As soon as the Amendment was published he authorised the Customs to issue a Press notice indicating to the trade precisely what the effect would be if the House, as he had reason to expect in view of the Committee's discussion, decided to accept the Amendment. He further wrote a letter to the hon. Member for Shoreditch and Finsbury (Mr. Collins), with whom he had been debating the matter and who had asked if he could send him certain facts. My right hon. Friend wished to follow the usual courtesies, and not to cut off any representations the hon. Member wished to make. He felt it his duty, however, to make a public announcement at the earliest possible moment.
That was the action my right hon. Friend took. He asks me to say he is fully convinced, on consideration, that it is right to exempt brooms and brushes from the tax. This remission will cost about £1½ million a year. I mention that simply because the House will wish to have full information. That sum has to be added to the £500,000 lost to the Revenue in consequence of the previous exemption of shopping bags and baskets. The total cost of the two exemptions will be £2 million, but it is £2 million only out of the additional revenue of £75 million which my right hon. Friend estimates


the Budget will produce. I do not think the House would wish me to expatiate at great length on this matter, considering the debates and views expressed in Committee, when I found myself in a little difficulty in defending the tax and resisting an Amendment. I hope that now I shall have fallen into step with hon. Members on both sides of the House.

Mr. Anthony Greenwood: I welcome the concession which the Chancellor has made in respect of brooms and brushes but, at the same time, must express our regret that he should ever have brought forward such a mean and miserable tax as the one which he has now abandoned. The Financial Secretary has talked about the difficulties that the Chancellor and he had in imposing the tax, but the right hon. Gentleman knows perfectly well that one of the Chancellor's predecessors, Sir Kingsley Wood, tried to impose the tax in 1940 and that his proposal was withdrawn within two minutes of the debate on the proposition having been begun. The right hon. Gentlemen should have taken much more care and examined the facts much more carefully before they went ahead with such a proposition as that.
The right hon. Gentleman referred to the hon. Members for Surbiton (Mr. Fisher) and Belfast, West (Mrs. McLaughlin), both of whom made powerful speeches in criticism of the Government, but I think that the Financial Secretary would be the first to agree that the most powerful attack upon this proposal came from my hon. Friend the Member for Shoreditch and Finsbury (Mr. Collins). It was he who drew attention to the fact that there is a number of small firms engaged in this industry, that over a thousand blind and disabled people are employed in it, that it involves a long apprenticeship, that it is extremely difficult to collect the tax on articles of this kind, and that there is no industry where the Purchase Tax is less appropriate.
Wiser counsels have prevailed. The last time the Financial Secretary concluded a debate on the subject, one of my right hon. Friends said that his reply had been even more miserably unconvincing than usual. However, wiser counsels have prevalied, and we welcome this new outbreak of generosity on the part of the Government, and wish that this new spirit had permeated the

Government earlier in our debates on this Bill.

Mr. Nigel Fisher: Unlike the hon. Member for Rossendale (Mr. Anthony Greenwood), I do not wish to be in the least carping in my praise. On behalf of my hon. Friends, I should like to thank my right hon. Friend very sincerely indeed for withdrawing the tax on brushes and brooms. Many of my hon. Friends did not like the tax, and some hon. Members on this side of the House, of whom I am afraid I was one, went to the point in our dislike of speaking against it and abstaining in the Lobby. We did not enjoy our situation as rebels. As hon. Members opposite well know, unlike them, we are a completely united party on all major matters of Government policy.

Mr. Jay: Did not the hon. Member hear the Financial Secretary say that he stood entirely alone?

Mr. Fisher: Did not the right hon. Member hear me say that we are completely united on all major matters of Government policy? It is perhaps because of that deep underlying unity of thought and purpose that we can afford sometimes to differ on comparatively minor matters such as this. We did not enjoy our position, but neither did we like the tax. Therefore, it is with sincerity and gratitude that we thank the Chancellor for resolving our double difficulty and graciously withdrawing the tax.

8.30 p.m.

Mr. Donald Wade: I welcome and support the Amendment. It is true that at first sight it seems to me a little puzzling. There is a double negative, or a double-double negative in it, but I think that the House understands the purpose of the Amendment. There is little doubt that the inclusion of household brushes, brooms and mops in the category of goods subject to Purchase Tax would have led to a number of anomalies, and to considerable hardship to certain blind employees who are engaged in and depend for their livelihood upon this industry and who might have had considerable difficulty in finding other employment.
I am always a little chary of looking a gift horse in the mouth and for that reason I hesitate to examine too closely


the circumstances surrounding the imposition of the tax and surrounding its removal, but I feel impelled to make one or two observations. In the first place, I find it difficult to believe that the tax was justifiable a fortnight ago and unjustifiable now. I do not think that the Financial Secretary suggests that that is so. He has told the House quite frankly that there has been a change of mind, but there is a matter of principle involved which should be touched upon before the Amendment is passed.
It would be rather painful to read all that the Financial Secretary said in the debate on 22nd November on this subject. I remind him only of these words:
It is logical that these goods should be included amongst household goods and therefore subject to tax under the general concept of the Budget, and I must advise the Committee to reject the Amendment."—[OFFICIAL REPORT, 22nd November, 1955; Vol. 546, c. 1419–20.]
Obviously, it could not have been logical then and illogical now.
Therefore, while I support the Amendment, I feel bound to point out the arbitrariness and at times the almost capricious nature of the decisions on Purchase Tax, which I regard as perhaps an inevitable characteristic of the tax. One day the tax is off and one day it is on. I think that the Chancellor appreciates the fact that this uncertainty plays havoc with the normal flow of goods from the producer to the consumer, from the manufacturer to the retailer. Furthermore, whenever it is thought that a Chancellor might change his mind or impose some additional tax, trade is very often brought to a standstill.
An even more serious aspect of this matter, illustrated by the Amendment, is the very great power which the Chancellor has over the economic life of every industry. This has been illustrated also in one of our previous discussions on pottery. The arbitrariness of this method of taxation is even worse than the uncertainty which it creates. I do not wish to be cynical or flippant, because this is too serious a matter for either of those approaches, but in trying to follow some of these Purchase Tax decisions I am reminded of some Eastern potentate wielding absolute power with bewildering partiality.
It may be that the Chancellor is a warm-hearted potentate. He has shown himself warm-hearted in his concern for blind persons such as those employed in the industry with which we are now concerned, but that does not alter the matter of principle to which I am trying to draw attention. While welcoming the Amendment, I have an uneasy feeling that possibly those who have applied for relief in other cases might have been successful if there had been that extra touch of persuasiveness or greater pathos in their appeal.
If that is so, the success of an application for removal from the list of articles subject to Purchase Tax is not dependent upon reason or logic or any economic principle but upon finding the key to the Chancellor's heart. Without reflecting upon the humanitarianism of the Chancellor, or of Chancellors in general, I regard it as an anomalous state of affairs and a fundamental flaw in our Purchase Tax system that decisions about it should be dependent upon finding the key to the Chancellor's heart.
There is one other objection, which I think is relevant and arises from this Amendment—the amount of time and energy, and sometimes manpower, that is expended in trying to understand these Purchase Tax Regulations. I am not the only hon. Member who has had letters from firms engaged in the making of these brushes and brooms. I passed on one letter to the Financial Secretary. The main problem there, as I think was the case with many of these firms, was in trying to understand the application of Purchase Tax Order No. 78, which, as the House knows, lays down that the question whether an article falls within a tax group is determined by reference to the character of the article itself and not by reference to the particular purpose for which it is bought. The Financial Secretary replied with his usual courtesy, and explained that this matter was being looked into.

Mr. Deputy-Speaker: Order. The hon. Member is going beyond the scope of this Amendment.

Mr. Wade: I will endeavour to follow your Ruling, Mr. Deputy-Speaker.
The firm engaged in this trade, to which the Amendment applies, pointed out that the proposal to impose Purchase


Tax had caused very considerable confusion in the trade, and it is clear, from an examination of that case—although I hope their problem has now been resolved—that it has been resolved only after many hours of investigation and days of uncertainty. If one adds to the problem of that firm the problem of all the other firms engaged in brush making, and considers all the other manufacturers, wholesalers and retailers who have to try to understand and collect this Purchase Tax, one gets some idea of the amount of time and energy, not to mention worry, that is inevitable under this system of taxation.
Therefore, I support this Amendment for two reasons. First, because it will grant relief to an industry that would have been adversely affected if Purchase Tax had been imposed, and, secondly, because it reduces in some small degree the range of goods which are subject to a tax which is inevitably complicated, is beset with anomalies, is expensive to administer and is very difficult to justify on any sound economic principles.

Mr. Roy Jenkins: I do not want to follow the hon. Member for Huddersfield, West (Mr. Wade) in his rather delicate discussion of the state of the Chancellor's heart. For the moment, I am more concerned with the state of the Financial Secretary's head. Although we support and welcome this Amendment, I must say that, from his speech, I find the whole of the original basis on which the Government's Purchase Tax proposals rests to be extremely doubtful indeed. I understood him to have been swayed by two speeches by his hon. Friends—the hon. Lady the Member for Belfast, West (Mrs. McLaughlin), and the hon. Member for Surbiton (Mr. Fisher), who addressed us, but did not stay very long with us.
The hon. Lady the Member for Belfast, West said that the Purchase Tax changes which this Amendment is designed to undo were unpopular and the hon. Member for Surbiton apparently said that there was no question of people buying the brooms, and whatever else we are discussing at the moment, because it was a case of keeping up with the Jones's. I understood that the Financial Secretary was so swayed by those two arguments that he, in conjunction with the Chancellor, has decided to rescind this proposal. I would have thought, however,

that these two arguments could apply to a much wider range of articles than those we are discussing. If unpopularity is to be the test of brushes and brooms and whether they should be subject to Purchase Tax, not only brushes and brooms but a wide range of other articles should be dealt with in this way. If the test is to be that it is not a question of people buying them for frivolous reasons of keeping up with the Jones's, it applies also to a wide range of things which we have been discussing.
Indeed, the Economic Secretary told us on the previous Amendment that he was convinced that the demands for the goods which he was then insisting on keeping subject to Purchase Tax was inelastic and that there could be no question of a falling off. I understand that the Economic Secretary has to reply to some debates and the Financial Secretary to others, but they ought to listen to each other's speeches because it is unfortunate when we have such contradictory views expressed.
We welcome this Amendment. I cannot feel that it has done the Government much good to chop and change in this fashion. I was surprised to hear the hon. Member for Surbiton saying that he regarded the budgetary policy of the Chancellor as a minor matter—at least, that was the implication of what he had to say—because he said that the party opposite were united on all major matters of policy. It is clear, however, that they are not united on the budgetary policy of the right hon. Gentleman and the Chancellor would have been distressed to hear those sentiments expressed.

Amendment agreed to.

Orders of the Day — Second Schedule.—(PROFITS TAX: CONSEQUENTIAL AND TRANSITIONAL PROVISIONS.)

Mr. Jay: I beg to move, in page 15, line 16, after the first "a" to insert "full."
This Amendment, like all other Amendments, attempts to help the Government and to improve the Bill, but whereas most of the others were designed to improve the policy, this is designed to improve the grammar and the drafting. It seems to us that this part of the Schedule needs a correction of an oversight by the Government and, if they have not committed an oversight, we should at least be clear what is meant by it.
This Schedule deals with the repayment of a loan which, when made to the proprietor of a business, was treated as a dividend distribution and thereby attracted Profits Tax. As we understand, the Schedule is intended to refund him the appropriate amounts of Profits Tax when that loan is repaid. So far as we can understand the wording, the Schedule is drafted on the assumption that the loan is always fully repaid in one sum. That is the point at issue. We want to ask the Chancellor, if he is to reply to this not very major matter, what would happen under this wording if a loan were partly repaid and not fully repaid in one sum? Is it intended that there is the possibility of a part refund? If so, how would it be calculated, because it does not appear to us that there is any provision for calculating the part under the Schedule as it stands? Or is there to be no refund of Profits Tax until the whole loan is repaid?
8.45 p.m.
That seems to us to be somewhat obscure, and I hope that the Government will be able to accept our way out of the difficulty. No doubt the Chancellor or the Solicitor-General has one of those briefs saying, "This Amendment must be resisted." I hope that on this occasion they will not accept that, but will apply their minds to our suggestion and finish the discussion by actually accepting an Opposition Amendment.
I am sorry—perhaps I should say that I am glad—that the Financial Secretary is not at the moment with us. I should have hated to see him again standing alone on the burning deck and being unanimously opposed by what we have learnt is a party which is entirely united on all minor matters, including the Budget. However, we are not to see that spectacle, and I hope we shall all finish up in harmony with the acceptance of the Amendment.

The Solicitor-General (Sir Harry Hylton-Foster): I should hate to deny the right hon. Member for Battersea, North (Mr. Jay) any pleasure, but, for reasons which I will give him in a moment, it is not possible to accept the Amendment. I hope to convince him to such an extent that he himself would not desire me to accept it.
With regard to the particular question which he raised, Section 36 (3) of the 1947 Act is always construed on the basis that, when part of a loan is repaid, a corresponding proportion of the increased tax due to the inclusion of the loan in the gross distributions is treated, for the purpose of this kind of provision, as the right amount to secure the repayment of tax. That is what happens.
What is wrong with the right hon. Gentleman's Amendment is that it does not do what he desires it to do. It would not have the effect of doing anything at all except of securing that relief would be given at the wrong rate in respect of partial repayment.
I will try to explain the matter very shortly by reference to an example. Let us suppose that in 1953 a company made a loan of £2,000 to a member, and there is a repayment of half the loan, £1,000, after the date in the paragraph, the end of October. That is an easy example. Let us see what happens. The increase in tax there due to the loan was £400, being 20 per cent. at the then rate on the £2,000. An appropriate proportion of half of it would be £200 of tax. If the paragraph applies, we get the right result, because if £1,000 is repaid after the end of October, 1955, one would calculate the gross amount by which one is to reduce the relevant distributions by reference to the then current rate of 25 per cent. if one is taking £200 as the tax equivalent and using the multiple here, the gross relevant distribution would be reduced by four times £200, which is £800, and the tax result is, in effect, to relieve the company of 25 per cent. of £800, which is £200, the right result.
The effect of the right hon. Gentleman's Amendment is that one goes back, as regards a partial repayment, to the old law. The effect would be that paragraph 2 of the Schedule would apply not to a partial repayment but only to a full repayment, and in that case one would have to calculate the rate in relation to partial repayment by reference to the rate current in 1953. The result would, of course, be to give the company an unjust excess of relief, which I know is not what the right hon. Gentleman wants. Therefore, I am compelled to deny him the joy of having his Amendment accepted.

Mr. Jay: I am glad to have given the Solicitor-General an opportunity to


address us. On this Bill he has not equalled the record put up by some Solicitor-Generals on Finance Bills.
He says that the law, as it stands, is always construed in such a way as to provide for part repayment of these loans. Does he mean by that simply that the courts or the tax collectors construe or interpret the law in some way different from the way in which the Statute actually stands, or does he mean that the construction which he puts upon it is the actual meaning of the words which are, in fact, now the law on the point?

The Solicitor-General: I should have to have notice of that question in order to look up the court authority about it, but without hesitation I give the right hon. Gentleman two assurances—one which he would care about and the other which he would not. One is that the Revenue authorities so construe it, and the other is that I myself so construe the Statute in its effect.

Amendment negatived.

Bill to be read the Third time upon Monday next and to be printed. [Bill 81.]

Orders of the Day — VICKERS V-1000 AIRCRAFT

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Godber.]

8.51 p.m.

Mr. Paul Williams: I wish this evening to raise the question of what is to me one of the most disgraceful, most disheartening and most unfortunate decisions that has been taken in relation to the British aircraft industry in recent years. I refer, as I think the Parliamentary Secretary to the Ministry of Supply will know, to the question of the cancellation of the contract for the Vickers V-1000 aircraft.
My first point is that it is vital to Britain in every sense, in aviation—in the field of industrial work and in the earning capacity of our industry—that we should be able to produce in our home industry a long-range pure jet aircraft which will be capable of coping with the first-class Trans-Atlantic passenger demand. It is, therefore, opportune to ask what are the likely developments in aviation over the next ten or fifteen years in the various aircraft groupings of which

we know—the long-range turbo-prop, the long-range pure jet, the medium-range jet and the medium range turbo-prop aircraft? I would have thought that it was almost inevitable that the long-range turbo-prop, which, even today, everyone admits will be able to cope in a few years' time only with the second-class traffic, will be swallowed up in the relatively near future by the pure jet aircraft.
Therefore, the medium-range jet, because of its specialised type of construction and because of the very decided limits of its range, will be superseded in its turn by the long-range pure jet. Meanwhile, the medium-range turbo-prop aircraft which is at present produced and marketed solely in this country will survive, but against inevitably increasing United States competition.
The conclusion I draw from these facts is that there is an urgent need for the British industry to be able to produce a long-range pure jet first-class trans-Atlantic aircraft. That can be produced by the British industry and, in fact, there is one potential aircraft available today. If my conclusion is right, that we shall see within the next ten to fifteen years developments to the point where the long-range pure jet aircraft scoops the pool, I would ask my hon. Friend what British aircraft is there which will be available in that period, other than the Vickers V-1000?
The Minister of Supply, outside this House, has stated recently that the Vickers V-1000 exists only on paper. Can my hon. Friend tell me where else the D.C.8, for example, exists today except on paper? One reads in the newspapers that there are orders in the region of 200 plus for this aircraft, which exists only on paper. Perhaps, in parenthesis, it is worth saying that of the £2,300,000 that has thus far been invested in the Vickers V-1000 aircraft not one penny has been spent on the civil version except by the firm itself.
For a few moments I want to deal with the criticisms which have been bandied about both in public and in private. The most obvious one, of which my hon. Friend will have heard so often, is the weight growth. I understand that the company concerned in making this aircraft originally estimated that the basic weight would be about 96,000 lb. That


has subsequently grown to about 112,000 lb. That sounds a rather surprising increase, but in heavy aircraft construction this growth, of about 20 per cent. is nothing unusual. It is in the normal form of aircraft development. There are, however, two points which are highly relevant upon this question. The first is that the weight growth has been completely matched, through the years, by an equal growth in the engine power needed to get this aircraft into the air

Air Commodore A. V. Harvey: Will my hon. Friend repeat those figures?

Mr. Williams: Yes. The original weight was about 96,000 lb. and the subsequent weight was about 112,000 lb.

Air Commodore Harvey: Perhaps I may correct my hon. Friend. My information is that the original weight of the military type was 190,000 lb., and that it has risen to 210,000 lb.

Mr. Williams: I am speaking about the basic weight. My hon. and gallant Friend may be talking about the all-up weight. There is a very legitimate difference of opinion here. We are talking about slightly different things.
The weight growth has been completely matched by the growth of engine power. Secondly, the weight growth has nothing whatever to do with the military specification. The weight factor is the sole responsibility of the manufacturer, and is not part of the military specification. This aircraft still meets all the military specifications which were laid down.
I now turn to the question of performance. From all the figures I have been able to lay my hands on the Vickers V-1000 and the two comparable American types seem to be astonishingly similar. The civil version of the Vickers V-1000 will be lighter; it will have a similar range; it will perhaps be fractionally slower, and—this, perhaps, is in the normal line of British aircraft development—it will have an added safety factor which comes from the normal British practice of having a lower wing loading.
Further, on present calculations it will have an engine which will produce a greater thrust than the comparable American civil aircraft. While mentioning the engine it may be worth recalling

that this aircraft has been deliberately designed around the Rolls-Royce Conway engine. Because of its design that engine is both more efficient and more economical than any other in the world, on Transatlantic routes as well as others.
Are we, then, to throw away all the accumulated advantages which come from our engine lead in the world, and the lead which could come from allying the best engine to an aircraft designed to house it? In addition, are we to throw away, in this aircraft, the inevitable ability to carry a bigger payload across the ocean? "The industry cannot cope," say the critics. This is the sort of criticism that one so often hears from the people who find reasons for not doing things, rather than from the people who supply the drive to get things done. It so much savours of the attitude and the frame of mind of what I rather irreverently call the "can't-do-it boys."
If there were sufficient willpower to carry through this venture as a national effort the job would be done. I do not doubt that there is much misused capacity in the aircraft industry, often frittering away highly-trained and highly-qualified technicians on what we may irreverently call a series of trivialities. I believe that much of the aircraft industry could be better employed on this potential world-beater.
Even if the industry could not cope at its present strength, are we to accept the position that a limit was placed by the Almighty on this industry and that there is a maximum size beyond which it cannot expand? I believe that the industry can cope at its present strength, but if it could not, surely it is just the sort of industry which we want to see expanding. We have a potential world-beater in this aircraft, but we lack faith in it ourselves.
The other day the Minister of Supply referred to new and exciting developments that would be coming in the supersonic era. On the series of remarks which the Minister made in a speech outside this Chamber, I note two things. The first is the timing of his remarks in relation to this discussion on the Vickers V-1000 and his withdrawal across the Atlantic. The second is that pie in the sky is no substitute for jam today. If we reversed this decision we could do without pie in the sky and we could get


a British, first class, civil, pure jet, Transatlantic aircraft into the air in the relatively near future.
I would ask the Minister: how can we hope to compete in the supersonic era unless we have the kind of experience and the know-how both of building and of operating in the immediate subsonic field? This question of experience must be paramount in all considerations relating to aircraft development. Surely we must have learned something from the example of the troubles over the Comet I. I believe that de Havilland's were quite right, at the end of the Second World War, to jump a stage in aircraft development rather than chase other aircraft manufacturers who were working overseas; but in jumping that step they ran the inevitable risk which, unfortunately, has made great difficulties for them in their own aircraft development.
Are we to contract out of long-range, pure jet manufacture and thereby hamstring our ability, through gaining experience in that type of aircraft, to produce in the supersonic era? That is what this decision to cancel the V-1000 means. It means that if we cease to produce for the subsonic field we shall not have the experience to be able to produce without the danger that comes from the de Havillands' example and the experience of operating in the subsonic field. We may also run the danger of being chiselled out of the manufacturing industry in the supersonic era.
There is a tendency to look at this issue from too rigid, too narrow and too Departmental a point of view. We ought to look at rather broader horizons, and from the point of view of our balance of payments position and our ability to earn our daily bread. We all know of the effort that has been made by the motor manufacturing industry in production for sales abroad. We are told by car experts that their products shows a return of about 9s. 6d. per lb. weight. The comparable figure for aircraft is about £5 or £10. In other words, the value of aircraft exports may be stated as from ten or twenty times as valuable as the exports of the motor industry, which is so obviously one of our most valuable exports.
I am not suggesting that because of this difference the motor industry is wasting its time. I am suggesting that here is an

even more important industry to encourage, to develop and to try to assist in producing for both the home trade and for export. If we in this country have anything to sell it is our inherent ability and skill and knowledge, and to contract out of this vital field is dangerous in the extreme to our future earning capacity.
I turn to the home market. The home market is traditionally regarded as consisting of the Corporations and Transport Command. I always thought that there was some reference in the Corporations' charters to the fact that they should buy British wherever possible. I believe that, even now, it would be possible for the Government or for B.O.A.C. to save this aircraft. If this decision to cancel the Vickers V-1000 is confirmed, B.O.A.C. will be faced in the late 'fifties with a very difficult position, and by the early 'sixties it will inevitably have to buy American for its Transatlantic services.
From a national point of view that will be a tragedy when here, in almost completed form, we have a potential world-beater. I still say that, from the national point of view the Government should take courage and reverse this extremely unfortunate decision, but if the decision is to stand there are certain things which we should learn from our experience. The first is that there are not sufficient home operators. The second is that, as long as Britain continues to think of herself as a small nation of 48 million people she will be condemned inevitably to obscurity.
If we think in terms of a great Commonwealth our future can be bright. Can my hon. Friend tell me, for example, why we should not ask the representatives of Qantas, South African Airways and the other Commonwealth operators to come in on the early planning stages of new aircraft? In that way we could obtain the highest common factor of the needs of all the Commonwealth operators who, in addition, and in return, would get aircraft as nearly tailor made to their requirements as is humanly possible. We should also be able to expand the size of what we are pleased to call the home market.
I ask the Government to reconsider this vital decision. This is neither the time nor the occasion for narrow, short-sighted—I do not wish to be offensive to my hon. Friend—or Departmental views,


which are too influenced by the need for immediate economy. Now is the moment for a bold decision which can open up new avenues for producing aircraft here at home which we can sell throughout the world. I hope that my hon. Friend will be able to assure us that the decision to cancel the contract for the Vickers V-1000 is not final and that the bridges have not finally been crossed. To that I add my hope that, at some time, the decision will be reversed.

9.10 p.m.

Mr. John Rankin: We are indebted to the hon. Member for Sunderland, East—

Mr. P. Williams: Sunderland, South.

Mr. Rankin: —for raising this matter tonight. I am sure he will recollect, as I think will the Minister, that when he asked a Question on this matter the other day, I, too, had a Question about it on the Order Paper.
This is an age of speed, but I am not primarily interested in speed. As one who uses aircraft regularly, my attitude is, safety first, safety second, and safety all the time. I always hope that safety will never be subordinated to speed, but I agree that they are not necessarily in conflict.
We are living in a world which demands speed, and if we are to live in that world we must trade in it and sell our machines to it. We have to meet the competition which faces us. If I had my way, I should like to see co-operation in design—and I am thinking primarily in terms of civil aircraft—not merely within this country but in the world. I should like to see a freezing of design and an agreed ceiling speed amongst the nations of the world. Since practically every machine being built today is built primarily for military purposes—with civil use as a secondary consideration—we are the victims of speed, because of the disagreements and discontents which exist in the world.
A week last Monday the Minister indicated that the V-1000 was more or less discarded. I agree with the appeal which has been made tonight, that, if it is not too late, he should reconsider the matter. Many of us have been disturbed by the fact that the engine which was to power that machine cannot find a market

here and is being sold abroad. If all I have heard about that power unit is true, it is unfortunate that it is not to be used at home.
Suppose we assume that the Ministry of Supply has finished with the V-1000. On the Order Paper in my hand there is a Question to the Minister for answer on Monday, 19th December, in which I pose to him the problem, assuming that nothing more will be heard of the V-1000, what does he intend to do next? I ask him whether
he will authorise work to begin now for designs on purely commercial aircraft to meet the needs of the era of supersonic speeds.
We have to do something about that. It is a challenge to the Minister; it is a challenge to the whole nation, which, in my view, possesses the finest designers in the world, the finest technicians, and the finest aircraft workers.
I have met many of them, and some of the prophecies made to me in 1946 and 1947 as to the future development of British aviation—particularly with regard to the helicopter—to cite an example, have been shown today to be exactly correct. I may not be able to develop that line too far, but I may say that one designer said to me in 1947, "It will be ten years at least before we can think of using a helicopter for civil aviation purposes." He said that in 1947, and no one today will deny that what that designer said is being shown to be absolutely correct.
I feel that the Question which I have put on the Order Paper and which I now pose to the Minister is apposite. If we are not to accept the V-1000, the problem is posed to every one of us, what are we going to do next? What is in the mind of the Government? If the Minister feels it is rather unfair of me to ask him now a Question I have put on the Order Paper for answer on Monday week, and tells the House that he would prefer to wait and answer it then, I shall accept his view, hoping—not against hope—that he will have the satisfactory answer that every hon. Member, on both sides of the House, would hope to hear.
I want to raise another matter which I think is consequent upon the Adjournment subject so ably spoken to by the hon. Member for Sunderland, East—

Mr. P. Williams: Sunderland, South.

Mr. Rankin: I am sorry, I will put the hon. Member in the East. That is where the wise men are supposed have come from and it is rather mysterious that I should put the hon. Member there.
I want to raise another question which I think is consequent upon the problem placed before us tonight. I indicated that co-operation was necessary if we are to develop civil aviation, particularly to the peak we want to see it reach. So on Monday this week I asked another Question. That Question dealt with the issue of co-operation among the firms which are producing aircraft for our use today. Unfortunately, as a result of the Question I innocently posed and the replies which were given—I would hesitate to claim to be the instrument of this—a slight rupture occurred between the Parliamentary Secretary and the hon. and gallant Member for Macclesfield (Air Commodore Harvey).
I am not here tonight to pour oil—least of all diesel oil—on the breach which occurred on Monday between those two hon. Members. I am looking at the matter from the point of view of co-operation between the producers of the aircraft. I know that the benches opposite are thirled to the idea of competition. Hon. Members opposite say that there has to be competition amongst the manufacturers of aircraft and that, as a result, we are bound to produce better and better aircraft to meet the world demand.
I am not arguing that at the moment, but I do claim that there must be co-operation amongst the producers of the aircraft, for the simple reason that a vast amount of public money is being poured into this new, young industry. I entirely approve of that, but if public money is being poured in to sustain the industry, the public must have a voice in the results of its efforts.
The Minister disagreed with me when I used the word "subsidies." If I was guilty of a terminological inexactitude, would he accept instead the word "subventions"? It has been estimated that £800 million of public money has gone into the manufacturing side of the British aircraft industry over the last nine or ten years. Because public money is being invested in it, there should be co-operation.
The producers of the Brabazon, de Havilland, Vickers and all the other great firms should use the Ministry as the exchange whereby technical knowledge and information about designs can be passed round among them, so that the paying public does not pay for the acquisition of the same knowledge over and over again, as, for all we know, might well be the case if that co-operation in design and technical development is entirely lacking.
I recollect that the Minister turned to the hon. and gallant Member for Macclesfield and used a very equivocal sentence. Again, I do not seek to pour oil on troubled waters. The Parliamentary Secretary said:
Yes, Sir. I hope that my hon. and gallant Friend's firm will give a lead in this respect."—[OFFICIAL REPORT, 5th December, 1955; Vol. 547, c. 4.]
Quite frankly, that created a little sensation in the House on Monday afternoon.

Mr. Emrys Hughes: Which is the hon. and gallant Member's firm?

Mr. Rankin: I thought everybody knew the firm. The hon. and gallant Member will not mind my mentioning it. The firm is de Havilland.

The Parliamentary Secretary to the Ministry of Supply (Mr. F. J. Erroll): Wrong again.

Mr. Hughes: Is it not Handley Page?

Mr. Rankin: Oh, yes; I am sorry. I had de Havilland in mind for another reason.
That Question and the interchange caused a little sensation in the House. One assumed that the co-operation that we wanted was in existence among all the manufacturers with the exception of Handley Page.

Mr. Hughes: My hon. Friend said £800 million of public money had been spent in the last ten years. Is his allegation that some of it has gone to Handley Page? Could he tell us something about the profits and dividends of Handley Page?

Mr. Rankin: I do not think that the hon. and gallant Member for Macclesfield and the Parliamentary Secretary will dispute that these favours have been bestowed with reasonable equity among


all the manufacturers of aircraft, especially the big five, in the United Kingdom. From time to time the profits which have occurred have been stated in the Press. I have referred to them in the House, to dividends of about 17 per cent. and 20 per cent., the distribution of bonus shares—

Mr. Hughes: Bonus shares?

Mr. Rankin: Yes, bonus shares.

Mr. P. Williams: On a point of order, Mr. Speaker. In accordance with what, I believe, is the custom, I wrote to advise you that the matter I wished to raise on the Adjournment was the development of the V-1000. Is it possible for us, in this debate, to range over the whole economy?

Mr. Speaker: The Question before the House is, "That this House do now adjourn," and it is permissible to raise anything involving Ministerial responsibility that does not involve legislation or taxation. However, previous Speakers have pointed out, with deprecation, that it is not proper to raise subjects unless there has been warning to Ministers who can reply to them, for otherwise those matters are not properly discussed.

Mr. Rankin: That part of my remarks was just a diversion, not an attempt to distract the House from the main subject of debate on this Motion. My hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) evinced his natural curiosity about all these matters, and I was momentarily replying, I hope not misguidedly.
I am seeking briefly to make two points. I am supporting generally the attitude of the hon. Member for Sunderland, South (Mr. P. Williams) by asking the Parliamentary Secretary whether the V-1000 is to go on to the scrap heap, and what is to be the next step the Minister plans to take to meet the demands of the supersonic era. Secondly, I am dealing with the need for co-operation, and I am sure that the hon. and gallant Member for Macclesfield will agree with me about the need for cooperation among manufacturers of British aircraft—the need not merely for competition but for co-operation—if we are to produce the type of aircraft to meet the needs of the era to which we are all looking forward.
The Parliamentary Secretary assured me on Monday that that co-operation, that interchange of information essential for the development of aircraft, was taking place, that the Ministry was the radiating centre of it, that it all came to him, and was disseminated among those who wanted it. But he seemed to exclude from the pool or from the company the firm with which the hon. and gallant Member for Macclesfield is associated, and it is no secret to say that the hon. and gallant Member was grieved at his exclusion.
It is the concern of the House to know that that partnership amongst all these great firms exists, and that they are not merely competing but are all working together in harmony, and spending properly and for the benefit of civil aviation the huge amounts of money which have been given to them, either directly or indirectly, to see that British civil aviation flourishes.

9.30 p.m.

Air Commodore A. V. Harvey: In these debates, as a rule, I declare my interest, which I think is well known to the House, and I do so again tonight. I would prefer to deal myself with the matter which the hon. Member for Govan (Mr. Rankin) has raised, probably with the best intentions, because I feel that I am quite capable of dealing with my own affairs. Briefly, however, my own impression is that on Monday last the Minister gave a hurried answer to what I thought was a perfectly ordinary question, and what was meant to be a helpful question. I do not think that he thought about it perhaps as much as he is capable of doing. If he did think about it, then in the short time that he has been in the Ministry of Supply he has not become conversant with what is going on in the aircraft industry.
There is a great deal of co-operation, not only between different firms in the industry, but with Farnborough, the National Physical Laboratory, and various other establishments. There is co-operation particularly with my own firm. Nobody works more closely with my own firm than Vickers. The point that I was making on Monday was that there is room for more co-operation, which in turn would save taxpayers' money.

Mr. Rankin: The hon. and gallant Member will agree that the matter which I raised was not a matter which merely affected his firm. I was not raising it from that point of view but from the point of view of seeing that his firm was brought within the co-operative circle which the Minister told us was in existence.

Air Commodore Harvey: I want to answer the interjection of the hon. Member for South Ayrshire (Mr. Emrys Hughes). He is always ready to discuss profits, which to him are quite immoral. We have had so many losses in nationalised industry that "profit" is an unknown word to the hon. Member. Let him visit an aircraft works and let him see the conditions in which the men work, the pensions schemes, the welfare schemes and so on. He may then have a better idea of what he is talking about.

Mr. Emrys Hughes: The hon. and gallant Member assumes that I know nothing about the aircraft industry. I represented Prestwick for a long time, and many of my present constituents live there. I travel to and from London every week in B.E.A. or B.O.A.C. aircraft. The hon. and gallant Member must not assume that because he knows a lot about the profit-making side of the industry we do not know anything about the useful side.

Air Commodore Harvey: We have heard a great deal about Prestwick but there are other places than Prestwick in the aircraft industry. One does not learn much about the industry by flying in an armchair between London and Glasgow.
The country, and certainly the House, were disappointed and dismayed when the Minister made the announcement that this project was being disbanded. I have tried since then to keep an open mind, because I feel that the Government had good reasons for the decisions which they took. So far, I am not convinced of the correctness of that decision, certainly not from a technical point of view. I should like to ask my hon. Friend the Parliamentary Secretary to the Ministry of Supply whether the Government are satisfied or not that this aircraft will meet its specifications. We have not yet been told whether or not the aircraft will perform what it is meant to do. I am told that it was required to take off within 2,000 yards in tropical conditions. I am assured

by the firm making it that it still stands by the claim that the aircraft has that standard of performance.
While the weight of the military type has gone up, the all-out weight of the civil version, the V.C.7, has gone down from 250,000 lb. to 248,000 lb., whereas the Boeing 707 and the Douglas D.C.8 are considerably heavier. So far as speed is concerned, the V.C.7 is estimated to be about 10 knots slower, because of its increased wing area compared with the others. Only last week, Boeings announced that the wing area of their aircraft was increased by 700 square feet.
Do not let us assume that the Americans will go straight ahead and build two wonderful aeroplanes to fly by the time they say they will, because there are many problems to be overcome. I feel that what the firm says is correct, and I have yet to be told otherwise—that Vickers could be two years ahead of either Douglas or Boeing in this project. Nearly £3 million has been spent already, and for the sake of perhaps another £11 million, we should have a Transatlantic aeroplane flying in 1959 or 1960.
It seems to me a most extraordinary decision to make, without explanation why it was taken. Is it a Treasury decision? I do not know, because it seems to me that Vickers are not just out for themselves, but here are cooperating. Even if the Government went ahead with the project, Vickers, having developed and made the prototype, would have to have it made by another firm, because they are so busy making the Viscount follow-on aircraft—the Vanguard. That is where the industry cooperates well.
We might ask why Vickers do not develop it themselves. I am told that, as far as the Vanguard is concerned, the firm will supply every penny required for the development of this great aeroplane, now under construction, which I think is a great achievement for free enterprise. It may cost £3 million, £4 million or £5 million, but it is going to earn a great deal of foreign currency for our country and provide employment for our workers. I thought the statement put out by the Minister last weekend really was not good enough. Here we have a new project which will probably be flying in the middle 'sixties. It struck me as being an airy-fairy specification


written by B.O.A.C. to let us feel that we have something to look forward to. I cannot believe that, having spent so much money, we can pin our hopes on a brand new specification which can give us an aircraft nine years' hence. That really is not good enough.
The Minister may have a reason, but if he does not tell us tonight, sooner or later the Minister of Supply will have to come to the House and give us the real facts about what is taking place. Vickers openly admit that they are a year behind with the V-1000. That is not unusual, when one considers the hundreds of thousands of man-hours spent in engineering design and development which have been put into the project. A year is really very little, and I ask the Minister not to rule it out on that account.
The American aircraft—the Boeing 707 and the D.C.8, I am told, cost about 41 million dollars—to be exact, 4,600,000 dollars—whereas the civil version of this aircraft could be produced for £1,300,000, and had the contract gone ahead, Trans-Canada Airways would have placed an order in dollars, which would have been coming to Britain. Naturally, though, we cannot proceed with a contract on a project of this type unless it is backed up by the industry at home. If we build one aircraft and send it out to Australia or Canada, we shall be out of touch with it. It has to be developed at home, primarily, with a home market for it. If it has received the blessing of the Ministry of Supply we are told we get facilities, but the manufacturer does not get the facilities of the wind tunnels at Farnborough and at the National Physical Laboratory and all the other advantages that go towards the production of an aeroplane capable of the performance which is intended.
I have a feeling that if this aircraft is dropped as proposed, it will be only a question of time before B.O.A.C. will come along asking for millions of dollars to place an order for D.C.8s. Already we have K.L.M. buying Viscounts, the first British aircraft which it has bought for many years, and if the V-1000 had gone ahead and proved successful I am told that K.L.M. would have been interested. After all, it is easier to deal with a country a hundred miles away than one thousands of miles away, particularly when its currency is not so hard.
I also believe that when the specification of this aircraft was written B.O.A.C. were in on the original discussions about operational requirements at the Air Ministry, and it was written into die contract that a certificate of airworthiness would have to be obtained. If there has been an error, it has been that the specification, as originally written, was for a military rather than a civil type. Had it been written for a civil type weight might have been saved, the performance might have been better and the Royal Air Force would have had to take it "off the peg." My impression is that there has not been sufficient co-operation between B.O.A.C. and the Air Ministry and the Ministry of Supply, but that is only guesswork up to a point.
I hope that we shall be given a better explanation than we have had so far. We are all disappointed, disheartened and unhappy about it. I still think that the Minister must have reasons other than those which we have been given. Vickers are very reputable people. They have already made a great contribution to our export trade of about 200 Viscounts sold abroad, many in America. They have broken into the dollar market, so we have to respect their point of view. It would seem that Vickers have had a raw deal, and I should like to see the matter cleared up once and for all. If there is doubt, let us ask an independent body, as opposed to the Ministry of Supply, to carry out an assessment of the V-1000. It is not that I doubt the Ministry, which has some very able people, but I should like to see an independent body check that assessment to see if the machine is capable of doing what was intended.
Britain has a great chance. Today this great industry is exporting £70 million worth of equipment, a total which could probably be increased in a short time to £100 million a year. I say that because not only is the aircraft itself concerned but in selling it we sell insurance and spare parts for 10 or 15 years, as well as many other things. Do not let us doubt what this great industry can do. If, however, it has to suffer under this handicap, and if the Government happen to be wrong, we have a great deal to lose. Therefore I beg the Minister to give us a frank explanation of what is taking place.

9.43 p.m.

Mr. Emrys Hughes: I admit at once that I have nothing like the technical experience of the hon. and gallant Gentleman the Member for Macclesfield (Air Commodore Harvey), whose war record and technical knowledge we all appreciate. Yet I suggest that the ordinary citizen, although he may not be a mechanic or a pilot, is also interested in civil aviation. I represent a part of the country which is greatly interested in Prestwick, with which I have been associated for many years. In fact, I was a member of the county council which passed the plans for the first primitive aerodrome at Prestwick.
I ask the hon. and gallant Gentleman what he would do if we had not provided aerodromes? It is useless to talk about long-range aircraft if they do not have suitable aerodromes. I submit that in supplying the great Transatlantic aerodrome at Prestwick we have done some service to the aircraft industry. If we had not provided aerodromes, the hon. and gallant Gentleman would not have any places from which to fly his aircraft, and there would not be so much profit in the aircraft companies.
I object to the rather slighting remarks which have been made about B.E.A.C. and B.O.A.C. The hon. and gallant Gentleman may remember that during the period when these Corporations were established I was a very faithful member of the Standing Committee concerned with the Bill. I suggest that it is, therefore, rather arrogant to assume that only an air commodore, or somebody engaged in making profits out of aircraft, is entitled to express his views on the all-important question of the development of civil aviation in this country.

Mr. P. Williams: No one has assumed that.

Mr. Hughes: I assumed that the hon. and gallant Member for Macclesfield thought that I know about aircraft only through sitting in an aeroplane flying between Prestwick and London. I have travelled over a great deal of the world in aircraft which, I am glad to say, start at Prestwick. I wish he would not assume that he is quite so omniscient, but would realise that we ordinary people who sometimes take an interest in the industry from the point of view of the taxpayers and the public are just as interested in

the development of the industry as are those who are interested in making profits.
I suggest that there is a rather curious liaison between the Minister of Supply and the various aircraft companies. I believe that the liaison is rather too intimate for the public interest. At least, I suggest that when we hear the Minister engage in a good deal of affectionate cross-talk with a representative of one of the big companies, we ought to take at least a philanthropic interest from the point of view of the ordinary taxpayer.
When my hon. Friend the Member for Govan (Mr. Rankin) raised the question about £800 million having been spent in the last few years in subsidising the aircraft industry, I believed I was entitled to show a little natural curiosity. I pursued the matter further and asked about dividends, and when the hon. and gallant Member for Macclesfield rose, I thought he was going to give us some facts about the profits of the various companies, of one of which he is, I believe, the chairman. I believe, from what I have recently been reading about certain of the big aircraft companies, that they are doing very well indeed. Therefore, I want to maintain a very vigilant interest to ensure that the hon. and gallant Member for Macclesfield is really representing Macclesfield and that he is not taking too affectionate an interest in Handley Page.

Air Commodore Harvey: The hon. Gentleman talks about subsidies to the aircraft industry. He is ignoring the fact that a great many aircraft of the figure mentioned have been delivered to the Royal Air Force. If he is interested in Macclesfield and would care to go there, he will find that my election majority has been increased on four different occasions.

Mr. Hughes: That is very interesting information, but I am interested not in the hon. and gallant Member's majority but in his profits. If he had been as communicative about his profits as he has been about his majority, I should have been much more satisfied.

Air Commodore Harvey: We have a balance sheet, which is made public.

Mr. Hughes: I suggest that the hon. and gallant Member has been singularly uncommunicative to the House on that question.

Air Commodore Harvey: As the hon. Gentleman has put the point again, perhaps I might say that it is a public company and its balance sheet is available. We are really very proud of it, and so are the workers. If the hon. Member had a little more interest in the workers, he would perhaps understand their point of view. They are sharing in it to a great extent, more than the hon. Member appreciates.

Mr. P. Williams: Let the hon. Member for South Ayrshire try another one.

Mr. Hughes: I am very much interested in the workers. The hon. and gallant Member for Macclesfield now wants another diversion. I want to know whether he will tell us what his company has made in profits over the last three years.

Air Commodore Harvey: The profit on a capital of £3 million or £4 million is about £500,000 per annum, of which 60 per cent. goes in taxation, a great percentage in wages, and the rest in the development of a new aircraft. Anyhow, it is public knowledge, and the hon. Member can get a copy of the balance sheet in the Library. I suggest that before he speaks in another debate he briefs himself rather better than he has done on this occasion, so that he will have the necessary knowledge and will not occupy valuable time in which other hon. Members wish to speak.

Mr. Speaker: The hon. Member for South Ayrshire (Mr. Emrys Hughes) must confine himself to matters which are within Ministerial responsibility. Anything which is not within Ministerial responsibility is out of order on the Adjournment. I would also ask the hon. Member to observe the courtesy of the House and not impute unavowed motives to any other hon. Member.

Mr. Hughes: I put a perfectly straightforward question to the hon. Gentleman and I fail to see that that is dishonourable, Sir. If it is not dishonourable to make profits, I should like to know—[HON. MEMBERS: "Oh."] I am not easily put off. I assume that there is some Ministerial responsibility in agreeing to give contracts to big companies. I suggest that the time has come when the machinations of the different aircraft companies should be very carefully scrutinised

by Members of the House in order that people like the hon. and gallant Member for Macclesfield may become civil servants instead of shareholders in profit-making companies.

Mr. John Hall: Would the hon. Gentleman prefer that contracts for aircraft, whether civilian or military, were given to firms which through inefficiency consistently made losses instead of profits?

Mr. Hughes: I will answer the hon. Member very briefly. I want all these contracts to be dictated purely in the public interest and the interest of the nation as a whole, and not in any particular private vested interest. It is the relationship between the Minister of Supply and these particular vested interests which concerns me as an ordinary Member of the House of Commons.
I was alarmed by the kind of crosstalk that went on between the Minister and the hon. and gallant Member for Macclesfield. I suggest that the House of Commons should take an interest in these particular contracts, and should take a very great deal of interest in civil aviation not from the profit motive but from the point of view of developing this industry as a publicly-owned industry, serving the national interest and the national welfare.

9.52 p.m.

Mr. Charles Ian Orr-Ewing: Since the hon. Member for South Ayrshire (Mr. Emrys Hughes) seemed to pitch the whole tenor of his speech on looking after the taxpayers' interest, I think that it is worthy of comment that he did not mention the fact that the two State Corporations of B.O.A.C. and B.E.A., good as they are, have received over £40 million grant from the taxpayers since the war in order to put them in their present position. I feel that if he would direct his attention towards the £40 million, and not pursue this red herring of the dividends of the aircraft companies, which are very heavily taxed, it would perhaps be of more use to our debate.

Mr. Frederick Lee: Would not the hon. Member agree that as a result of the research work of the two Corporations, the aircraft industry as a whole has benefited very considerably, and the nation has, too.

Mr. Orr-Ewing: I must apologise for a heavy cold which gives me a slightly hoarse voice. I will deal later with this problem of those aircraft which get the benefit of the Corporations' support and those aircraft which, through no fault of their own, do not get the benefit of the Corporations' support.
I hope that when my hon. Friend the Member for Altrincham and Sale (Mr. Erroll) speaks, he can perhaps draw the distinction—because there is a good deal of confusion—between the V.C.7, which is the civil version of this aircraft and the Vickers V-1000, which is the military version. As I understand it, £2·3 million has been spent so far on the military version, and although the civil version will have several common features, it is at the moment only a paper aircraft, and it would presumably entail the efforts of a great number of scientific staff and a great deal of money to transfer this paper version into an operational civil aircraft.
It has been said that the whole prestige of Britain will be affected by the decision not to go ahead with this aircraft. If I may use an un-Parilamentary term, that is poppycock. I do not think that the prestige of America has been completely upset in the world's eyes because, at this moment, there is flying on United States air lines a turbo-prop British aircraft, the Viscount. The world is not upset by the fact that we shall have the turbo-prop Britannia flying on the Transatlantic route long before America or any other nation can have an equivalent aircraft. The prestige of the United States has not been affected because they have come here and asked whether they can use some of our latest and best engines not only in the military versions but the civil versions of their aircraft. None of these facts has affected U.S.A. prestige.
The difficult question we have to decide is whether we should proceed with this aircraft in addition to the other projects which we have backed. Together with many of my hon. Friends, I have felt that, in the past, in both the military and civil field, we have tended to back too many projects and have thus spread our technical effort too thinly. The result has been that our aircraft, military and civil, have tended to come forward too slowly. It is therefore a courageous decision to make at this moment not to

go ahead with the V-1000. I only wish that hon. Members opposite—and I see that only three are present at the moment—had made a decision about the Brabazon very much earlier and saved some of the taxpayers' money.
We now have not only the Britannia 300 L.R., the Viscount, and its successor, the Vanguard, but also the Comet IV, which will be a Transatlantic aircraft of great merit. I have no doubt that during its development the improvement of its engines and the amount of stretch still available will allow the Comet eventually to do the West-to-East Transatlantic crossing without a stop and the East-to-West crossing with only one stop.
But in the eyes of the public the important question is not the speed of the aircraft, or the blue riband of the Atlantic, but the cost of flying from Britain to America or from America to Europe. The paramount consideration is how much this aircraft will cost to build and how much to operate. I say, without fear of contradiction, that the British aircraft at present envisaged—the Comet IV and the Britannia 300 L.R.—are going to be cheaper to buy and to operate than their equivalent American versions, the Boeing 707 and the D.C. 8.

Mr. P. Williams: Does not my hon. Friend agree that that will also be true of the Vickers V-1000 in the new era of immediately subsonic aircraft?

Mr. Orr-Ewing: It is probably true, and it is very difficult for us to judge questions of timing, the cost, and operational efficiency of the Vickers V-1000 when it is still only a paper aircraft.
I support the proposal of my hon. and gallant Friend the Member for Macclesfield (Air Commodore Harvey), and ask for an independent judgment on this issue. The trouble is that, possibly through politics, we have got ourselves into a position in which a new aircraft cannot proceed unless it is backed either by B.E.A. or B.O.A.C. What does that mean in concrete terms? It means that an aircraft will find favour and proceed through development to production only if Sir Miles Thomas and his advisers happen to favour it. Sir Miles Thomas and his advisers are only human; they have made mistakes in the past, and it is quite possible that they are making another mistake this time. It seems to me eminently sensible to have


an independent judgment upon this issue, and I ask the Minister to think most seriously whether it would not be wise, at this stage, to bring in an independent judge to state whether the V.C.7—the civil version of the Vickers V-1000—is worth proceeding with.
I would only add that the company concerned has a great deal of work. It has the various versions of the Viscount, with which it has done magnificent work, and—

It being Ten o'clock, the Motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Barber.]

Mr. Orr-Ewing: I am absolutely convinced that when the Vanguard arrives it will be as good as its predecessor. I hope that this company, in its justifiable pride and ambition, does not take on too much, lest other aircraft, on which we rely on the short-haul routes, will fall behind in the world's race.

10.1 p.m.

Mr. William Shepherd: The issue of this debate is perhaps one of the most important for the British aircraft industry. During the last ten years we have been inclined to do far too much. Even approaching supersonic speeds we are faced with a great many technical troubles. We have failed to deliver aircraft to the operating companies because we have attempted to do too many things.
I have no means of judging whether the decision to drop the V-1000 is correct, in the interests of the taxpayer and of the aircraft manufacturing industry, but it is clear that we must drop some projects if we are to attain an efficient industry. The position of this industry is extraordinary. It acts as a vacuum, sucking in labour from every industry around it. It employs them at an efficiency far below the general level of the British engineering industry, involving a great waste of manpower and skill. At this time we cannot afford, because of our balance of payments difficulties, to use our experienced and highly-skilled labour inefficiently. I do not think that I am being harsh and unfair.
I urge my hon. Friend the Parliamentary Secretary to try to satisfy the House

that the dropping of the V-1000 project was best in the national interest, so that the industry may have less to do and may do that less more efficiently.

10.4 p.m.

The Parliamentary Secretary to the Ministry of Supply (Mr. F. J. Erroll): In the course of an interesting debate we have heard, from the closely knit arguments, something of the nature of the problems which my right hon. Friend had to consider and reach a decision upon, when considering this particular aircraft, and, indeed, other aircraft. My hon. and gallant Friend the Member for Macclesfield (Air Commodore Harvey) said that he was unhappy about the decision to cancel the V-1000 aircraft project. Sitting immediately behind him is my hon. Friend the Member for Hendon, North (Mr. C. I. Orr-Ewing) who, broadly, supported the decision. Both my hon. Friends have considerable expert knowledge and their arguments are based on a sound appreciation of the facts as known to them. I only mention that to show how complicated and difficult the issues can be.
I should like, first, to thank my hon. Friend the Member for Sunderland, South (Mr. P. Williams) for his courtesy in giving me some indication of the lines of his speech so that I could, as far as possible, reply to the points he proposed to raise. I hope, therefore, that the hon. Member for Govan (Mr. Rankin), and the hon. Member for South Ayrshire (Mr. Emrys Hughes) will forgive me if I do not follow them in their rather wider excursion into the field of aircraft manufacture and financing, since these are not matters to which I expected to have to reply tonight.
I want to make clear from the very beginning the point made by my hon. Friend the Member for Hendon, North, namely, that the House has really been considering two separate aircraft—a military transport called the V-1000, and the civil aircraft to be developed from it called the civil version of the V-1000, or the V.C.7. My right hon. Friend decided to cancel the order for the military transport only after the most careful and anxious consideration and discussion with all concerned, including, of course, the company—Messrs. Vickers-Armstrongs Ltd.—who have co-operated fully in helping my right hon. Friend's advisers at all


stages. I should mention that the matter of the Treasury which my hon. and gallant Friend the Member for Macclesfield raised, while, of course, in the mind of my right hon. Friend, was not one of the predominating factors in arriving at the decision.
Naturally, it is a disappointment to have to cancel a project before the prototype has flown. Engineers and design teams have, understandably, a very keen desire to see their efforts brought to a successful conclusion. In this case, however, a full and impartial assessment of the facts made cancellation the only possible course. Reference has been made to an independent inquiry. At first sight, that would seem to be an attractive proposal, but I can assure my hon. Friends who put forward that suggestion that, on the facts, an independent inquiry could not arrive at any different conclusion. It is the facts which my right hon. Friend has examined, and it is on the facts that he has arrived at his decision. I do not think that those facts are really in dispute.
From a mass of technical and other detail—with which I do not propose to burden the House tonight—three main facts emerge as decisive. The first is that the military aircraft could not meet the full specification in time. The second is, as an alternative, that it might just have met the full specification, but several years late. The third main fact is that the long-range Britannia has gone forward well, and, although not meeting the original military specification, it can be made available earlier, which is an important point.

Mr. C. I. Orr-Ewing: Is my hon. Friend quite confident that there will not be any trouble with the 755 engine which is required to power the long-range Britannia or its successor—that the two Bristol engines which are required to power the long-range Britannia, the protos for the 755, will proceed without trouble?

Mr. Erroll: I think it is very difficult to be quite confident about the successful development of any engine. One can have reasonable confidence and one hopes that the experience which the manufacturer has gained will enable a successful engine to be produced. I should be glad to look into that matter

more carefully and inform my hon. Friend, but I can say no more than that at the moment.
Turning to the civil version, the V.C.7, I must explain to the House that this aircraft exists only on paper. The Ministry of Supply has never placed a development contract for this civil version. Even if a civil version were to be developed, it could not be ready for operation before 1960. Here again, without going into too much detail, I must point out that the civil version would have been substantially different in several important design features from the military prototype.
It was hoped, however, in the original conception, that the development and testing of the military version would reduce the time required to test and prove many of the features in the civil version. Without the military version to precede it, the civil version would absorb a correspondingly greater time in developing, testing and proving. My hon. and gallant Friend the Member for Macclesfield said that the V.C.7 could be two years ahead. Without the military version to precede it, I think that would be most unlikely.
With no customer for the V-1000, my right hon. Friend had to consider the future of the projected civil version. My hon. Friend the Member for Sunderland, South made an important point when he referred to the export potential—and, of course, that is a very live factor. The industry has a good record in post-war exports and one naturally had hoped that such a civil version could add still further to our export trade.
Nevertheless, we must consider the civil version not only for export but for use by a home operator. The company itself has said that it could not successfully introduce an aircraft of this size in the absence of a home operator with whom it could collaborate in eliminating the inevitable teething troubles and other difficulties which unavoidably appear when a new design of aircraft is put into service.
The company—Vickers-Armstrongs—has had considerable experience, of course, of the value of a home operator since British European Airways provided this vital element in the successful development of the Viscount. The only possible home operator for the civil version was B.O.A.C., and B.O.A.C. decided that, in fact, it could not place an order for the


V.C.7 for a number of reasons which I will give the House in a moment.
Here, I should like to deal with an important point made by my hon. Friend the Member for Sunderland, South, who suggested that Qantas or South African Airways, or some other Commonwealth operator, could fulfil that rôle. I am assured that that would not be practicable, because by a home operator is meant an operator whose main base is in the United Kingdom, who would return the aircraft to the United Kingdom for servicing and maintenance and who would thereby be able to keep in close touch with the manufacturer.

Mr. P. Williams: I am not concerned with the example of Qantas and South African Airways so much on this question as with ensuring that we should see whether we can get co-operation with Commonwealth operators at the design stage in future aircraft.

Mr. Erroll: I will try to deal with that point later in my remarks.
The fact remains that not only has there been no home operator for the V.C.7, but there has not been any particular foreign interest in purchasing that aircraft, for the very good reason that they would not consider doing so unless a home operator had shown a prior interest. My hon. and gallant Friend the Member for Macclesfield referred to interest taken by T.C.A., but I am informed that latterly T.C.A. has withdrawn its interest, although it did express interest earlier.

Air Commodore Harvey: Only yesterday I was informed by a head man of Vickers that had V-1000 gone ahead Trans-Canadian Airways would have gone ahead and possibly K.L.M. as well.

Mr. Erroll: That may be so, but without a home operator they withdrew their interest. That is the dilemma, that without a home operator it is not possible to develop an aircraft of this size and so interest would-be foreign customers.
I now want to turn to some of the reasons why B.O.A.C. did not feel it could proceed with the purchase of the V.C.7. B.O.A.C. already has large outstanding orders and feels unable to commit itself to spending more money on V.C.7's for delivery in 1960. My hon.

and gallant Friend the Member for Macclesfield said that he would not be surprised if B.O.A.C. came along with a demand for dollars in 1960 with which to buy the D.C.8—

Air Commodore Harvey: Before then.

Mr. Erroll: —or, as my hon. and gallant Friend suggests, before then. It would seem at present that that is extremely unlikely because the capital resources of B.O.A.C. are already heavily committed to the purchase of British aircraft.
It is a very striking fact that B.O.A.C. is at present determined to buy British and to fly British and is committed up to the hilt in that wholly desirable policy. It is satisfied that it can hold its own commercially on the North Atlantic route until well into the 1960s with the Comet IV and the long-range Britannia. B.O.A.C. places great emphasis on the superior economy of turbine-propelled aircraft compared with jets. It does not feel that an aircraft capable of flying non-stop from London to New York will seriously damage British air traffic in the early years of the next decade.
Moreover, without the support of a B.O.A.C. order or R.A.F. demand for the military version, there is very little likelihood of any other foreign customer buying the V.C.7. So, with the powerful reasons put forward by B.O.A.C. and the absence of a likely foreign customer, in such circumstances, the Ministry of Supply cannot give any support to the development of this aircraft. The House should not accept the argument that Britain will have no first-class aircraft capable of carrying passengers across the Atlantic in 1958 to 1960, which is an argument that has been much put about in the Press as well as elsewhere. We shall have the Comet IV, which will need to make one stop and the Britannia 300 long-range which will cross the Atlantic without refuelling.
I suggest to my hon. Friend the Member for Sunderland, South that those two fine aircraft are surely a sufficient answer to his point, that we cannot hope to compete in the supersonic era if we do not do so now. We are competing now, and competing very successfully, with these aircraft which are building or in the course of development.
Another important point is economy of operation, to which my hon. Friend the Member for Hendon, North has referred. The cost of the Britannia per passenger mile will, so far as we can estimate, be considerably less than for the American Boeing 707 or for the Douglas D.C.8. I should mention that these two American aircraft have still to be proved on Transatlantic flight. The first-class traffic is likely to be quite small across the Atlantic compared with the much larger tourist-class traffic. For this latter traffic, the Britannia has plenty of future work to do, and in the opinion of B.O.A.C. it will be extremely remunerative work.
My hon. Friend the Member for Sunderland, South referred also to the resources of the British aircraft industry. I must ask him, and, indeed, my hon. Friend the Member for Cheadle (Mr. Shepherd), to distinguish between productive capacity and design and development resources. It is the design and development resources which are strained at the moment—strained, my hon. Friend the Member for Cheadle might say, with too many projects; but I do not think that that is the case now. It might have been so in the past, but the number of projects now is more in line with the design and development resources of the industry. I am very glad indeed to have confirmation of this from my hon. and gallant Friend the Member for Macclesfield.
I was sorry that my hon. Friend the Member for Cheadle went on to make strictures about the aircraft industry, which I do not think are altogether borne out by the facts. He referred to an industry which was inefficient and was extravagant in its use of labour, and he made various other points. It may appear to be lavish in its use of labour to a person who does not fully appreciate how important it is to make sure that the aircraft are absolutely correctly constructed; for there is no room for error in such an important field of manufacture.
If we want to see whether the industry is efficient, we have only to look at its export record since the war. If it was a very inefficient industry, it could hardly have such a striking export record as it possesses. I can make only a brief reply on such a wide issue. Perhaps my hon. Friend will secure an Adjournment debate on the efficiency of the industry, when I

will do my best to deal with the points which, I know, he sincerely raises.

Mr. Shepherd: I do not want to debate the issue at this juncture, but surely my hon. Friend appreciates that when an industry is dependent to such a material extent on Government subvention, efficiency in the sense that other industries know it can hardly be expected to exist.

Mr. Erroll: That is precisely the kind of point I should like to deal with in another Adjournment debate. I could answer it fully, and, I think, to the complete satisfaction of my hon. Friend.
I appreciate very much what my hon. and gallant Friend the Member for Macclesfield said about my rather hasty reply to his recent supplementary question. We are old friends. I was unnecessarily and unreasonably sharp on Monday afternoon, because I was thinking that if there was a possibility of improvement it could be allowed to come from the person who put the supplementary question. My hon. and gallant Friend and I have discussed the matter since and I have learnt a good deal from what he has told me. I am sure he will allow me to assure the House that I have benefited greatly from the opportunity of further words with him. We remain the close friends that we have always been, despite the attempts of those whom I would call my hon. Friends on the other side of the House to make far more of this matter than ever was intended.

Mr. Emrys Hughes: May I ask the Parliamentary Secretary—

Mr. Erroll: I am running short of time and hope that the hon. Member will not mind if I do not give way.
A number of my hon. Friends referred to the resources of the aircraft industry. It is the design and development resources of the industry which are strained at the moment. Military requirements are very heavy, and virtually all available design resources are fully employed. The development and production cycle for a large new aircraft is now so long—perhaps, eight years—that there is always a risk of working on an aircraft which is out of date by the time it is flying.
We have every hope of challenging our formidable American competitors with the next generation of British aircraft.


As my right hon. Friend has said, discussions are at present proceeding with airline operators on the sort of specification to which these aircraft should be designed. My hon. Friend the Member for Sunderland, South has suggested that we are to be chiselled out of manufacturing in the supersonic era. I can assure him that we are certainly not going to be chiselled out of our fine position in the design and development of aircraft. We are now looking ahead. I hope that the House will be patient with me when I say that I cannot say more just now.
I do not believe that our competitive position in the intervening period will be disastrously weakened by the absence of the V-1000 or its civil version, as has been suggested by so many critics. I do not think that that will be so. For the reasons which I have given, the withdrawal of financial support for the V-1000 became inevitable, but, as I have endeavoured to show, this is by no means the end of the story.

Question put and agreed to.

Adjourned accordingly at twenty-seven minutes past Ten o'clock.